Annual report 2015
WE BUILD THE FUTURE WITH IT ATEA ASA ANNUAL REPORT 2015 2
Content
Key Figures 3 CEO Comments 6 We build the future with IT 8 Business Overview 16 Atea's products and services 16 Local presence and worldwide delivery capabilities 22 Segments 24 Members of the Board 29 NOK in billion NOK in million Board of Directors' Report 2015 31 27.9 951 Shareholder Information 39 revenue EBITDA*
Financial statements and Notes
Atea Group Financial Statements 43 Atea Group Financial Notes 48 Atea ASA Financial Statements 87 Atea ASA Financial Notes 91 Auditors' Report 102 Corporate Governance 103 17 % 6,779 share of the market full-time employees ATEA ASA ANNUAL REPORT 2015 3
Key Figures Group 2011 – 2015
NOK in million 2011 2012 2013 2014 2015
Revenue 20,228 20,930 22,096 24,588 27,904 Contribution 4,855 5,062 5,320 5,717 6,403 Contribution margin (%) 24.0 24.2 24.1 23.3 22.9 EBITDA* 871 824 800 958 951 EBITDA-margin (%)* 4.3 3.9 3.6 3.9 3.4 EBITDA 858 811 701 929 924 KeyKey figures, figures,Key EBITnøkkeltall figures,nøkkeltall nøkkeltall 651 560 355 584 514 Earnings per share (NOK) 5.96 5.08 3.33 4.14 3.76 20152015 2015Diluted earnings per share (NOK) 5.90 5.04 3.31 4.10 3.71 Dividend per share (NOK) 2.00 5.00 9.50 6.00 6.50 Net financial position 283 49 -419 -829 -750 Cash flow from operations 1,023 783 874 959 1,287 Liquidity reserve 2,061 1,834 1,326 1,628 1,573 Equity ratio (%) 37.9 38.9 31.6 28.1 25.3
Number of full-time employees at the end of year 5,781 6,185 6,280 6,504 6,779
Revenue Revenue per country EBITDA* 2011 – 2015 (NOK in million) 2015 2011 – 2015 (NOK in million)
30,000 30,000 30,000 1,000 1,000 1,000
25,000 25,000 25,000 750 750 750 20,000 20,000 20,000 2011: 20,228 Norway: 26.0 % 2011: 871 15,000 15,000 15,000 500 500 500 2012: 20,930 Sweden: 36.9 % 2012: 824 10,000 10,000 10,000 2013: 22,096 Denmark: 27.5 % 2013: 800 250 250 250 5,000 5,000 5,000 2014: 24,588 Finland: 6.6 % 2014: 958
0 0 0 2015: 27,904 The Baltics: 3.4 % 0 0 0 2015: 951 11 12 11 13 12 14 13 15 14 1115 12 13 14 15 11 12 11 13 12 14 13 15 14 1115 12 13 14 15
* Before share-based compensation, expenses related to acquisitions, and restructuring costs. Revenue, Revenue,Konsern Konsern Revenue, Konsern Revenue perRevenue country per country Revenue per country EBITDA, KonsernEBITDA, Konsern EBITDA, Konsern ATEA ASA ANNUAL REPORT 2015 4
WE ARE ATEA Approximately 6,800 full-time employees located in 89 cities ATEA ASA ANNUAL REPORT 2015 5
Atea is the market leader in IT infrastructure and system integration for businesses and public sector organizations in the Nordic and Baltic regions.
Strength in our markets Equally important, we are among the Top 3 channel Built for growth and sustainability With nearly 6,800 employees located in 89 offices partners in Europe for many of the world’s best As a publicly traded company listed on the Oslo in seven European countries — Norway, Sweden, technology companies, including: Microsoft, Stock Exchange, Atea takes pride in its long-term Finland, Denmark, Lithuania, Latvia and Estonia Apple, Cisco, HP Inc, Hewlett Packard Enterprise, record of delivering above-market revenue growth — Atea has a powerful local presence across all of IBM, Lenovo, VMware, Citrix and EMC. and in providing a healthy, consistent dividend our markets, unmatched by competitors. payout to investors. For 2015, Atea reported Based on Atea’s unique mix of competence and revenue of NOK 27.9 billion: up 13.5 percent Commanding a 17 percent share of the markets we technology partnerships, our customers count on compared to last year, and the highest in our serve — far exceeding that of other providers — we us for professional insight on how to do more company’s history. are the largest and the most adept at what we do. with IT. To that end, Atea is at the forefront of the latest technologies, in areas such as mobility, Corporate responsibility and good stewardship Making a difference with technology collaboration, security and cloud computing. of our planet are also at the core of what we do. Given our size and reach, Atea can provide the Atea fully supports the United Nations’ Global broadest range of IT infrastructure support and As a result, we can enhance productivity and solve Compact and its ten principles of human rights, advice to our customers. This means that we are even the most complex business challenges in labor, environment and anti-corruption. This not only able to provide great products, but that both the public and private sectors. means that we govern ourselves in a way that we also have the internal competence to design, helps build an inclusive, sustainable economy, implement, support and operate highly complex capable of delivering lasting benefits to people and integrated IT solutions. and the markets where they live. ATEA ASA ANNUAL REPORT 2015 6
Letter from the CEO
Dear shareholders, At Atea, our mission is to “Build the future with IT”. We believe that information technology, combined with knowledge and creativity, can improve productivity and living standards across society. It is with this purpose that we set out to become the market leader in IT infrastructure across the Nordic and Baltic regions.
We are very proud of the positive role that our company plays as an IT provider and trusted adviser to our customers, both in the Steinar Sønsteby (born 1962) government and in the private sector. For this reason, we have CEO chosen to make our corporate mission the theme of this annual report. More information on our corporate mission can be found in the pages which follow.
We also believe that our business approach and leading market Steinar Sønsteby joined Atea in 1997 and was managing director position in the Nordic and Baltic regions creates excellent oppor- of Atea in Norway in 2006-2012. Since October 2012 Steinar tunities for Atea to deliver a strong long-term investment return has been Executive Senior Vice President in Atea ASA and was to our shareholders. We have set clear financial objectives for our appointed to CEO of Atea ASA in February 2014. Before joining company to achieve this: Atea he was the CEO of Skrivervik Data AS. Steinar Sønsteby holds a degree in Mechanical Design from Oslo First, we aim to increase our revenue organically faster than the College of Engineering and a Bachelor of Science in Mechanical market and to further strengthen our market share through selective Engineering from University of Utah (USA). He also has a finance acquisitions. In addition, we aim to consistently improve our operating degree from Norwegian School of Management (BI) and for Training margin over time. Finally, we seek to generate strong cash flow in Management and Human relations from Dale Carnegie Institute. through profit growth and improved cash conversion, enabling a high dividend payout to investors. ATEA ASA ANNUAL REPORT 2015 7
I took over as CEO in 2014, and in that year we succeeded in The financial objective which we did not meet was improving our pan-Nordic shared services and competence, we can be both achieving each of these financial objectives, within revenue growth, operating margins, which fell as a result of challenges in Norway near to our customers and at the same time access competence market share, operating margin, cash flow and dividend payout. and Denmark. We have reduced staff in both businesses during and shared resources across the Atea system. All of this enables 2015, and will focus on improving gross margin and operating us to add value to customers which is unmatched in the Nordic We started 2015 with strong momentum, but met unforeseen efficiency throughout the group in 2016. and Baltic regions. challenges in our Norwegian and Danish businesses. This required us to make management changes in Norway, and to reduce staff in We enter 2016 with confidence that our market position is stronger In sum, we believe that our market will continue to grow as both our Danish and Norwegian businesses. By Q4, both businesses than ever before. IT investments have never been more critical for customers increase their spending on IT products and services. showed clear signs of improvement, with renewed revenue growth our customers, as they handle ever more sensitive information, We see that the market will increasingly favor vendors which add and a lower cost base heading into 2016. transactions and communication through IT networks, and expand value to customers outside of a pure reseller transaction. We are their networks to ever more devices. This creates huge opportunities confident that Atea has built a unique position as the leading IT Otherwise, our Swedish and Baltics businesses had outstanding and challenges for our customers: the opportunity to transform infrastructure provider in the Nordic and Baltic markets, a position results in 2015, acquiring new customers and increasing our share productivity within their organizations and the challenge of building which is only becoming stronger with time. of wallet in the existing customer base. In Finland, our business had and maintaining networks in a secure and sustainable way. a more difficult year, but won two major new frame agreements We continue to invest in the ability of our organization to deliver toward the public sector which will secure a higher activity level With so much at stake, our customer’s IT departments are over- complete solutions to our customers and to improve efficiency. in the years to come. whelmed as they try to navigate a rapidly changing technology With another year of solid growth in 2015, we consider our company landscape and build solutions to meet their needs. This is where to be very well positioned to deliver strong financial returns to our Overall, we still managed to meet nearly all of our key financial Atea can differentiate itself from the competition as a trusted investors in 2016 and beyond. objectives in 2015, despite the challenges that we faced. Our group adviser and service provider. revenue increased by 13.5 percent to NOK 27.9 billion, with organic growth much higher than the market. Our market share grew to As the largest IT infrastructure provider in the Nordic and Baltic Oslo, 16 March 2016 17 %, more than three times higher than our next largest competitor. region, we can provide total solutions and services to our customers, Our free cash flow was a record high NOK 868 million. Our Board across all areas of their networks and infrastructure. As the will propose a dividend payout of NOK 6.50 per share in 2016, second largest player in IT infrastructure in Europe, we have representing a dividend yield of 8.8 percent based on Atea’s share access and support from the leading global IT vendors which price at the end of 2015. is unparalleled in our region. With our local office presence and ATEA ASA ANNUAL REPORT 2015 8
Our mission: WE BUILD THE FUTURE WITH IT ATEA ASA ANNUAL REPORT 2015 9
How do you see the future The best way to With that vision, Atea is guided on its mission where you live? going forward. PRESENT It’s an inviting question that people ask of each predict the future other. And it’s one that typically gets answered “We build the future with IT: that is our mission,” MEETS with ambitious, hopeful plans. is to invent it says Sønsteby. It’s an idea that is so powerful that it has been embraced in each of the countries – Alan Key FUTURE However, hope and ambition only give us — at Pioneer computer scientist where Atea operates today. Each expressing the best — an incomplete answer. All we can do with mission in a way that is country specific. At Atea, we believe that information that part of the equation is make predictions. technology, combined with knowledge Here at Atea, we rise to this challenge — building “This is an idea that resonates profoundly where and creativity, can transform produc- To be constructive, these plans must be followed the future — by embracing the promise of tech- our customers and technology partners live,” tivity and living standards across by deliberate action: a fusion of confident optimism nology. More than just treating it as a vessel into Sønsteby adds. “Thus in Sweden, the mission society. It is with this purpose that and well-considered choices. As pioneer computer which we put society’s hopes and dreams, we see becomes We build Sweden with IT. In the Baltics, we set out to build a company to be scientist Alan Key reminds us: “The best way to IT as a sophisticated tool that changes the way We build the Baltics with IT. And so on.” the market leader in IT infrastructure predict the future is to invent it.” we look at the world. When used wisely, it opens across the Nordic and Baltic regions. up choices to us in ways that were previously Building creates meaning Working from 89 offices in seven We build it. Together. unthinkable. A better future becomes real. Building the future with IT is a mission that has European countries, staffed by nearly This entails more than just stepping forward into a unique meaning for each country that Atea 6,800 professionals, we work hard a time that’s yet to come. It also means having Vision guides mission serves. Each yields a narrative that is unique to every day to build the IT systems which a well-defined understanding of present-day “Building the future starts by having a solid its culture, its people and their ambitions. People will shape a better tomorrow. challenges and a plan to solve those challenges understanding of where you are in the present,” working together produce stories about building in the near term. In other words: when we talk explains Atea CEO Steinar Sønsteby. “With us, better connections, about transformation, about about building with information technology (IT), that started with our vision, which is The Place growth and reinvention, about sustaining a way the future is not an abstraction. It’s as near to to Be.” It encapsulates the choices that went of life and about expanding opportunity. us as tomorrow. into building this company to what it is today: the market leader in IT infrastructure in the Nordic Each of the stories that follow is about how the and Baltic regions. present builds a common future. ATEA ASA ANNUAL REPORT 2015 10
Building Finland with IT: a story about building better connections
For Finland, building the future with IT is a vital undertaking. Technology is playing a key role Mobility and in helping shift the nation away from being a resource-export economy to being one that’s digitization is diversified, resourceful and more innovative.
changing the way Success hinges on building better connections with markets, customers and even with business we work, changing relationships within Finnish enterprise. the meaning For Juha Sihvonen (Managing Director, Finland), of work and these better connections are powered by a communication reduces travel cost and enhances execution and post-implementation analysis — fundamental change in the way that people are cooperation between locations as employees can today’s CIO (Chief Information Officer) is a CEO’s accelerating the able to work today in Finland. “Digitization and talk face to face whenever they want to, wherever (Chief Executive Officer) true business partner.” mobility,” he explains, “mean far more than what they want to. They work together in a way that is different from speed with which they seem at face value. It’s not just a matter of before: inextricably linked now, rather than as having a more efficient medium, or a quicker way Another example: home construction in Finland. separate entities. we can pivot to to manage business processes. And it’s about Here, building with IT means the design stage accomplish goals. much more than just being able to communicate is reduced dramatically, thanks to the switch to In addition to the gains delivered to large organi- wirelessly. Mobility and digitization are changing mobile enabled tablets. “They can move quickly zations in both the public and private sector, the way we work, changing the meaning of work now and make critical decisions even at the earliest achieving better connections through IT also and accelerating the speed with which we can stage in a project, avoiding costly errors and means better opportunities for small-sized busi- pivot to accomplish the goals that matter most project delays.” ness in Finland. Sihvonen notes: “it’s the smaller- to us.” sized enterprises where the future is especially Juha Sihvonen Doing more in less time is just the beginning important for Finland, because this is where the Managing Among examples of this change in action, he of how IT is reshaping communications in this boldest risks and the biggest visions tend to come Director, Finland cites a Finnish-based pharmaceutical and labo- Nordic country. As Sihvonen points out, digitiza- from. Here at Atea, we recognize this and that’s ratory equipment supplier. Having chosen Atea’s tion is also creating deeper partnerships between why we work hard to ensure that we can offer the AnyWhere communication solution, today they senior positions within Finnish enterprise today. right combination of services and advice for that have unified all personal and teleconferencing “Because everything now is so tightly connected important part of the marketplace.” communication. Easy to use, cloud-based video — from concept to business development to ATEA ASA ANNUAL REPORT 2015 11
Building the Baltics with IT: a story about transformation
For the Baltic nations (Latvia, Lithuania and Estonia), building the future with technology is a Here, building story about transforming a region into a confident, modern market where both businesses and public the future with IT services can grow.
means building With a combined economy of some $171 billion, these three nations today are capitalizing on something that’s having open, growing economies that have much better than strong economic links to the Nordic countries. This is reflected in Atea’s work here. “Under- before. stand that for us, the future is about far more than just sustaining something,” explains Arunas Bartusevicius (Managing Director, Baltics). “Here, building the future with IT means building some- thing that’s much better and different than before.”
The impact of technology on the Baltics is indelible.
It means that businesses and public services technology. All their supplies and equipment and As Bartusevicius observes: “People come here who invest in IT today — working with Atea and management flows are all digital now. It’s changed now and they see how much things have changed, its technology partners — are seeing a complete everything for them.” thanks to technology. Through Atea and the effi- transformation in how they do business and in ciencies that digitization can deliver through our Arunas Bartusevicius how fast they can thrive. Bartusevicius cites an Here, building the future with IT means more than work and the products of our technology partners, Managing example of a construction firm whose operations just keeping pace with the rest of the industrialized the Baltics today are catching up and growing Director, Baltics used to rely entirely on paper-based systems. “By world. It offers a rare opportunity to jump forward more confident. That means a promising future saying yes to IT, they jumped completely ahead and compete as equals with the most modern for all of us.” into the future and today are a model user of economies of the world. ATEA ASA ANNUAL REPORT 2015 12
Building Denmark with IT: a story about growth and reinvention
“For us in Denmark, the future isn’t something that’s far away: it’s what we have to get ready for We deliver from a right now because it’s practically within reach.” That’s how Morten Felding (Managing Director, Danish persective Denmark) sums up the immediacy with which a solution that building Denmark with IT is taking shape. “Danish businesses are ambitious and innova- works both at tive,” he explains, “they expect zero downtime, home and abroad. full interoperability, secure networking, and fully integrated mobile that supports their work flow.” Just as important, they look to Atea as a local provider and as a company of professionals who understand both the domestic and international means computing that’s secure, mobile focused “Let’s remember,” notes Felding, “IT used to just dynamic of delivering IT services. “Here’s what and scalable to meet the needs of a fast growing be a department in an organization. Today, tech- our customers expect now and in the future: that company.” nology is everywhere. That has huge implications we deliver from a Danish perspective a solution on where a business needs to focus.” By build- that works both at home and abroad.” A second example is a Danish-based hearing ing a future with Atea as a trusted partner in IT, aid manufacturer. Here, Atea looks after all PC businesses can reinvent what they do, how they That is precisely where Atea thrives: local solu- desktop management for this growing firm whose work and the markets they want to serve, because tions backed by IT chosen from global partners employees number in the thousands. “Whatever their concentration can stay where they are the that customers can use to meet their goals in the the employee needs in terms of services and subject experts. marketplace they want to serve. support on their work stations, Atea delivers online, right away.” Morten Felding Felding cites two examples where Atea is Managing building Denmark with IT. First, a Copenhagen- For companies that have their eye on expanding Director, Denmark based facilities company (i.e., cleaning, property beyond domestic borders, that’s valuable peace management, catering, support and security of mind. It means they can have the confidence to services) that’s running on Atea’s complete grow while counting on Atea to deliver rock-solid enterprise mobile management solution. “This IT solutions. ATEA ASA ANNUAL REPORT 2015 13
Building Norway with IT: a story about sustaining a way of life
Thanks to technology, Norway has achieved a consistent top-ranking as one of the world’s most When it comes to connected countries. As of 2015, it’s also home to fifty of the 500 fastest-growing tech companies services, goods in Europe, the Middle East and Africa.
and innovative However, building with ambition and innovation only tells us part of Norway’s story about the ideas, Made in society they want for themselves in the future. Norway means Here, IT plays a central role in the deliberate something very choices that Norway is making to sustain a way important here. of life that’s cherished by its people. “In Norway, we take great pride in having built a Norway. By being model users of digitalized tools means something very important here. And that’s And that’s worth country that has a high standard of living,” explains and workflows, education, healthcare and other worth preserving.” Steinar Sønsteby CEO and Acting Managing social programs can be delivered more efficiently: preserving. Director (Norway). “It comes with a price: higher achieving greater outcomes for less cost. He explains that for Atea, building the right future wages, higher costs for education, healthcare and with IT is about more than capitalizing on oppor- other public services.” All of these are challenges Just as important, security in the realm of IT ought tunity: “we have an obligation to make full use in a highly competitive global marketplace. to be an extension of those values, says Sønsteby. of technology in the manner that is right for the “We need to ask what kind of society do we want: customers we serve, consistent with the values Steinar Technology mitigates those costs, he explains. that is a major challenge as we work together to and dreams that they have. That is why we are Sønsteby “Building with IT here — and especially automation building our future with IT.” consistently a great fit in the markets we serve.” Group CEO. Acting managing and digitization of services and workflows — director for Norway means we keep jobs, traditional production and Atea understands this need and the values that from April 2015 to February 2016. idea generators here at home rather than having power the choices that Norwegians make. As to outsource them abroad where costs are lower.” Sønsteby observes: “When it comes to services, This applies just as much to public services in goods and innovative ideas, Made in Norway, ATEA ASA ANNUAL REPORT 2015 14
Building Sweden with IT: a story about expanding opportunity
For Sweden, a country whose economy hinges on exports, the success of businesses and public A digitalized enterprises depends heavily on having world class IT infrastructure. It’s an essential utility that drives economy means a growth, which in turn creates opportunities here digitalized society, that were previously out of reach. “The time we live in now is one of amazing opportu- and that changes nity,” explains Carl-Johan Hultenheim (Managing everything. It means Director, Sweden). “A digitalized economy means a digitalized society, and that changes everything that anyone with here in Sweden. It means anyone with a smart country that’s aiming to triple its mining production connect the dots of innovation in IT using new idea can scale it out like never before.” by 2025. methods to make things work in ways never a smart idea can before imagined. “We have a powerful IT backbone here that When capitalizing on opportunity through IT, scale it out like helps us expand our ideas outwards beyond our however, moving forward into the future is defined Opportunity also means treating security with borders,” adds Magnus Sallbring (Chief Marketing by choices. As Sallbring points out: “the question utmost importance. As Carl-Johan Hultenheim never before. Officer, Sweden). “It means a better Sweden.” we need to ask about technology is no longer a explains: “this massive shift to digitalization means He cites IT investments in education that help matter of can we do this?” Today, the important that there are really complex things happening schools do a better job of educating students in question is what should we be doing with this?” at the back-end of IT infrastructure today and less time. “That means smarter students become that’s not where most of our customers should more resourceful workers and business people. For both private and public enterprise in Sweden be devoting their attention.” In this way, Atea is It means we’re a more prosperous country that today, that is a question that is best answered in the right place at the right time. “Our job is to can afford to maintain our healthcare and other by consulting with the skilled, professionals at make sure that the complicated, mission critical, Carl-Johan Hultenheim services. So it’s a virtuous circle.” Atea and its technology partners. “We are, after security imperative functions are all looked after so Managing all, Sweden’s largest local global network,” says that our customers can stay focused on delivering Director, Sweden Equally important, building Sweden with IT runs Sallbring. products, services and bold new ideas with deep into the land itself. Today, as a result of strategic confidence.” investments in IT, the country’s mining industry It means that Atea is ideally positioned to help boasts a modern wireless network that operates make full use of Sweden’s powerful IT backbone, reliably under the earth, ensuring greater worker connecting innovators with the world’s leading safety and higher productivity — crucial for a technology partners. Together, they can creatively ATEA ASA ANNUAL REPORT 2015 15 ATEA ASA ANNUAL REPORT 2015 16
Atea's products and services Atea's business can be divided into three separate product and service areas: hardware, software and services. The strength of the company is to a great extent based on Atea's broad range of products in both hardware and software. The product range is supplemented by services, based on personnel with key competences within these product areas. Altogether, this distinguishes Atea from its closest competitors, who often specialize in specific niches. ATEA ASA ANNUAL REPORT 2015 17
The company's hardware, software and services top ten partner with the leading international IT Atea's role as a system integrator ensures added offerings can be divided into four areas: suppliers, means that Atea has a large negoti- value for its customers. Atea contributes to creating ating power in relation to its IT suppliers. This value for its customers on a daily basis by provides Atea's customers with very competitive increasing efficiency through access to informa- prices and terms from these suppliers. tion, improved collaboration and the exchange of data. This is based on thorough knowledge of Atea’s market position ensures that Atea is the customers’ business combined with a deep not only the most attractive partner for the knowledge of IT infrastructure solutions. On established suppliers in the industry, but also the basis of long experience and competence, upcoming niche players with cutting edge Atea ensures that customers choose the right technologies within their field, who want to products among the multitude of technology launch their products in the Nordics and Baltics. manufacturers, all of which satisfy customer Atea is therefore constantly approached by new needs. Nonetheless, the greatest value lies in Communication: Secure and effective communication and networks suppliers, who want to partner in marketing, Atea's ability to combine products and services Collaboration: Video and web conferencing, IP telephony, AV solutions, selling and servicing their products. For Atea’s into complete solutions, which allow the various Unified Communication solutions, mobility and chat customers, this means that there is virtually technologies to interact. The more complex the Clients: PCs, tablets, smartphones, printers no IT infrastructure supplier with which Atea solutions, the greater the value – and the stronger Data centres: Servers, data storage, virtualization and management has not established cooperation or from which Atea stands in relation to its competitors. Atea cannot deliver products. At the end of 2015, Atea was selling products from more than 7,000 Atea is conscious of the fact that the key to IT suppliers. success lies in robust and permanent relation- ships with customers and suppliers. The company Atea has a full range of products and services, Atea’s customers are always two steps ahead Atea’s primary focus is on selling products therefore focuses on facilitating meetings which is complemented by Atea's size. This of what is happening in the fast-paced techno- and solutions from ten carefully selected IT among customers, technology suppliers and the makes Atea an interesting and important logical development with each of the vendors. suppliers, which represents more than 70 % company's own consultants, in order to discuss partner for many of the world's major technology Atea can therefore not only give advice as to of the total revenue. These ten suppliers the technology of tomorrow and new possible manufacturers. what is available in the market today, but also represents the forefront of technology within solutions. advise on tomorrow’s products from the leading IT infrastructure, and collectively form the basic In recent years, cooperation with suppliers has vendors before anyone else in the Nordic and IT architecture for most organizations. Focusing Atea has more than 27,500 customers and has intensified and been developed further in order Baltic regions. the sales efforts on a limited number of suppliers a strong focus on customer satisfaction. Regular to better exploit commercial potential. Atea there- not only allows Atea’s salespersons and solution customer satisfaction surveys indicate that Atea fore has a seat on the advisory boards of the The fact that Atea by far is the market leader in architects to sharpen their messages, but also has one of the highest ratings in the industry. leading IT suppliers. This ensures that Atea and the Nordic and Baltic region, and a worldwide provides economies of scale and scope in the training and certifying of consultants. Virksomhetsbeskrivelsen
20,000 7,000 6,000 ATEA ASA ANNUAL REPORT 2015 18 15,000 6,000 5,000
5,000 4,000 10,000 4,000 3,000 3,000 5,000 2,000 2,000
1,000 1,000 0 11 12 13 14 15 0 Hardware 0 11 12 13 14 15 11 12 13 14 15
Driftsinntekter, Driftsinntekter, Produkter og tjenester Hardware Driftsinntekter, The hardware businessDriftsinntekter, is Atea's largest business area. 13 .8 percent growthSoftware Approximately 58 percentTjenester of revenue is from the sale of hardware. In 2015, this part of Atea's business reported revenue of NOK 16.2 billion, which represented an Hardware revenue 2011 – 2015 (NOK in million) increase of 13.8 percent compared with 2014.
20,000 7,000 6,000
6,000 As the second-largest5,000 IT infrastructure company purchasing terms and conditions from impor- 15,000 5,000 in Europe, Atea has far greater buying power tant suppliers. This ensures that Atea can offer 4,000 2011:4,000 12,237 than its competitors do. In addition, Atea coope- competitive prices to its customers, and win 10,000 3,000 2012:3,000 12,173 rates closely with the world's leading suppliers contracts with relatively higher margins than its 2,000 2013:2,000 12,463 of hardware technology. Atea's largest suppli- competitors. 5,000 2014:1,000 14,212 ers include well-known1,000 names such as HP Inc.,
0 2015: 16,1770 Hewlett Packard Enterprise,0 Lenovo, IBM, EMC, Market conditions were positive across all 11 12 13 14 15 11 12 13 14 Cisco15 and Apple. 11 12 13 geographies14 15 in 2015. According to Gartner and IDC, the Nordic hardware market increased by Of all of the Group's hardware purchases, appro- 1.8 percent in constant currency in 2015. With Driftsinntekter, Driftsinntekter, ximately one third pass through AteaDriftsinntekter, Logistics, a comparable growth of 9.4 percent in constant Hardware Software Atea's centre for logistics, recyclingTjenester and confi- currency in 2015 Atea gained considerable guration located in Växjö, Sweden. This center market share. allows Atea to negotiate ever-better centralized Virksomhetsbeskrivelsen
20,000 7,000 6,000 ATEA ASA ANNUAL REPORT 2015 19 15,000 6,000 5,000
5,000 4,000 10,000 4,000 3,000 3,000 5,000 2,000 2,000
1,000 1,000 0 Software 11 12 13 14 15 0 0 11 12 13 14 15 11 12 13 14 15
Driftsinntekter, Driftsinntekter, The softwareProdukter ogbusiness tjenester provides software andHardware Software Driftsinntekter, Driftsinntekter, Asset Management (SAM) solutions. In 2015, Atea reported 13.2Software percent growthTjenester software revenue of NOK 6.1 billion. This represents an increase of 13.2 percent compared with 2014. The software Software revenue segment accounts for 22 percent of Atea's total revenue. 2011 – 2015 (NOK in million)
20,000 7,000 6,000
Atea is the largest software reseller in the Nordic These two roles enable Atea to deliver value at 6,000 5,000 15,000 and Baltic regions, and through 2015, Atea has every step of the value chain from the identified 5,000 4,000 continued to strengthen its partnerships with need to the fully functional software solution. 4,000 2011: 3,864 10,000 3,000 the leading software vendors like Microsoft, 3,000 2012: 4,365 2,000 IBM, VMware and Citrix. As the largest vendors Atea’s customers have continued to experience 2,000 2013: 4,852 5,000 expand their product portfolio, Atea has moved increased complexity with software running on 1,000 2014:1,000 5,364
into new growth areas together with its partners. multiple devices,0 with some services on premise 0 2015: 6,0740 Examples of this are high growth segments like and other services11 in the cloud.12 In 201513 some14 of 15 11 12 13 14 15 11 12 13 14 15 cloud, mobile device management and security Atea’s largest software partners have had a very software. high focus on the transition to the cloud solutions. In a cloud environment,Driftsinntekter, Atea’s knowledge of both Driftsinntekter, Driftsinntekter, Software continues to be the segment of the software licensing and integrationHardware work is unique. Software Tjenester market with the highest growth rates, and accor- This allows Atea to take the important role of ding to Gartner and IDC, the Nordic software a strong and trusted advisor on how to build a market grew 4.4 percent in constant currency in robust hybrid infrastructure, leveraging the best 2015. With a growth of 8.8 percent in constant from private, hybrid and public cloud solutions. Another important trend within the software consultancy services to both data center and currency in 2015 Atea grew at a speed which business these years is IT security. The fact client environment, and is experiencing solid was double that of the market, and thus gained To achieve a strong competitive position in the that employees bring confidential information growth in the demand for both. Solutions to market share. cloud environment, Atea has made ambitious everywhere on their portable devices, and the de-central environment is e.g. antivirus for investments in competences, processes and that there are external communication lines to the PC and software that can wipe the mobile The software business is closely linked to Atea’s services in the last couple of years. Atea has built organizations most confidential and critical IT phone memory if it is lost. Security solutions software solutions sales and consultancy servi- a very strong internal community of specialists, systems, has brought discussions of IT security to the central environment is e.g. firewalls and ces business, which has approximately three across the region, and has started development from IT conferences to the board room. Atea is encryption software to the network and security thousand certified consultants in the Nordics of public cloud volume solutions. supplying a full range of IT security licenses and software for the server room. who help customers to integrate their software. Virksomhetsbeskrivelsen
20,000 7,000 6,000 ATEA ASA ANNUAL REPORT 2015 20 15,000 6,000 5,000
5,000 4,000 10,000 4,000 3,000 3,000 5,000 2,000 2,000
1,000 1,000 0 Services11 12 13 14 15 0 0 11 12 13 14 15 11 12 13 14 15
Driftsinntekter, Driftsinntekter, Produkter og tjenester In 2015, theHardware business area accounted for 20Driftsinntekter, percent of Driftsinntekter, Atea's overall revenue and contributed revenueSoftware of NOK 5.7 12.8Tjenester percent growth billion during the year, which represents growth of 12.8 percent compared with 2014. Services revenue 2011 – 2015 (NOK in million)
As the20,000 number of products and the complexity of Furthermore7,000 contracted services increases the 6,000
the IT architecture is growing, there is an ever- utilization6,000 of the consultant base, as it requires 5,000 15,000 increasing need for consultants, who can imple- a more constant5,000 use of resources, and provides 4,000 ment and run the IT infrastructure. According to a better 4,000overview of the needed competences 2011: 4,126 10,000 3,000 Gartner and IDC, the Nordic services market grew during staff3,000 planning. The contracted share of 2012: 4,392 2,000 2.5 percent in constant currency in 2015. With total services2,000 revenue increased from 39 percent 2013: 4,775 5,000 a growth of 8.5 percent in constant currency in in 2014 to1,000 45 percent in 2015. 1,000 2014: 5,012
2015 Atea0 grew at pace which was three times 0 0 2015: 5,652 that of the market,11 and12 thus gained13 market14 share.15 Atea offers a full11 range of12 services13 for the14 IT 15 11 12 13 14 15 infrastructure products from cradle to grave. This The services area is Atea's most profitable busi- means that the customers only have to turn to ness area and importantDriftsinntekter, to Atea achieving its one vendor for their ITDriftsinntekter, infrastructure needs. The Driftsinntekter, strategic goals. TheHardware company has a strategy to fact that customers canSoftware choose from a complete Tjenester increase this area's share of the Group's overall range of IT infrastructure services does not only revenue, especially in the area of contracted mean that they will have just one point of contact, organization, so that the customers can be sure has increased. Such products offer the users a service agreements (services contracts with a but also that Atea will take care of the integration to be serviced by people with the right compe- major increase in mobility, and the opportunity term of 12 months or more). process and all the communication involved. This tencies. Atea’s consultants hold more than 7,500 to take their workplace with them. With access saves the customer significant time, money and different technology certifications. to the companies' business-critical IT systems, When customers are outsourcing the mainte- energy. this development entails a significant risk for the nance and operation of their IT infrastructure this The outsourcing of internal IT functions to exter- loss of data and sensitive business information. strengthens the relationship with and dependency Atea has approximately 4,000 consultants and nal partners still represents a strong trend in the Services related to the security and updating of upon Atea, regardless of whether the offered attaches great importance in having the consult- services market. This applies in particular to the mobile units are therefore becoming more and service is basic maintenance of the PC’s, opera- ants with the deepest knowledge within their outsourcing of the management of PCs and other more important to Atea's customers. tion and surveillance of customer network or data field. Extensive competence training is there- mobile devices. The importance of services and center services offered from Atea’s data centers. fore continuously conducted in all parts of the security connected to smartphones and tablets ATEA ASA ANNUAL REPORT 2015 21 ATEA ASA ANNUAL REPORT 2015 22
Local presence and worldwide delivery capabilities
Atea is the number one supplier of IT infrastructure in the Nordic and Baltic regions. With offices in 89 cities in seven countries and approximately 6,800 employees who know their local market, Atea is well positioned to assist the customers to solve their local needs. ATEA ASA ANNUAL REPORT 2015 23
Atea is organized based on a country model with a Managing Director in each country who has a clear profit and loss responsibility, and a business model based on a flat organizational structure with decentralized decision making close to the customers. This ensures that Atea’s customers will always be speaking to an Atea representative, who not only speaks their native language and understands their local needs, but will also be able to make decisions and execute on these in a fast manner. Atea’s business is divided into five geographic segments: Norway, Sweden, Denmark, Finland and the Baltics.
Atea is following its customers outside its own geographical region, and in 2015 Atea delivered products and services in more than 130 countries.
Deliveries in countries outside Atea’s home geography are made in close cooperation with Atea’s partner network. Atea’s network consists of blue chip IT infrastructure companies in the local markets. The fact that Atea has an The countries where established partnership, and a proven track Atea delivered record for deliveries in most countries of the products and world, is an assurance to Atea customers that services in 2015. all offices and subsidiaries will receive the same high standard of service, whether they are located in Oslo, Shanghai or Rio de Janeiro. Landsidene
ATEA ASA ANNUAL REPORT 2015 24
Atea in Norway
Revenue (NOK in million) EBITDA* (NOK in million)
7,268 (+6.8%) 193 (-30.0%)
Full-time Employees Cities Revenue (NOK in million) Hardware: 4,439 (61%) Software: 1,142 (16 %) 1,657 (+20) 25 ( – ) Services: 1,687 (23 %)
Norge: Sverige: Danmark: Finland: Baltikum: Norway is a large market for Atea,Driftsinntekter contributing pr. kategoriDespite the challenging market,Driftsinntekter Atea had higher pr. kategori In response to weaker marketDriftsinntekter conditions, pr. kategori Atea Driftsinntekter pr. kategori Driftsinntekter pr. kategori
26.0 percent of Group revenue in 2015.Hardware Due to sales across both products and servicesHardware in 2015. announced that it would reduceHardware its staff by 50 Hardware Hardware Steinar Sønsteby the geographic spread of the country and the Total revenue was NOK 7.3 billion, an increase of employees during the second quarter of 2015. (born 1962) Software Software Software Software Software Group CEO. customer preferences for local suppliers, the 6.8 percent from 2014. Hardware revenue was The costs of these employees were however Acting managing director Norwegian business is organized Tjenesterbased on up 9.8 percent, software revenue Tjenesterwas down by carried throughout most of theTjenester remainder of the Tjenester Tjenester for Norway from April geography. The country is split into five regions 4.2 percent, and services revenue was up by 7.5 year, and had a negative impact on the full year 2015 to February 2016. with 25 offices in total. The local offices have percent from the prior year. The growth in hard- result. As of 31 December 2015, Atea had 1,657 their own sales persons and consultants, but are ware was primarily driven by increased sales of full time employees in Norway, an increase of 20 supported by centralized back-office functions as client products, while software revenue fell from from the prior year. Steinar Sønsteby has comprehensive leader- well as specialist competences in areas such as a very strong 2014. Growth in services revenue ship experience from top-level management cloud, IT outsourcing and mobility. was driven by higher sales of contracted services, Michael Jacobs (born 1967) took over the role of positions for almost 20 years in Atea, including such as datacenter outsourcing agreements. managing director for Atea Norway on February his current position as Atea group CEO. In total, he has close to 30 years of experience The Norwegian economy is heavily influenced 29, 2016. Michael joined Atea from Microsoft, in the IT industry. Steinar holds a degree in by the oil and offshore sector, and the signifi- The Norwegian business reported an EBITDA* where he worked as Managing Director of Micro- Mechanical Design from Oslo College of cant drop in oil prices during 2015 meant that IT of NOK 193 million, down from NOK 276 million soft Norway. Prior to this, he worked for over Engineering and a Bachelor of Science in infrastructure spending was down in some parts in 2014. The EBITDA* margin was 2.7 percent 10 years as Managing Director of Dell's country Mechanical Engineering from University of of the private sector. This impact was particularly in 2014, down from 4.0 percent in 2014. The operations in Norway, Sweden and Denmark. He Utah (USA). felt in the western coastal region of Norway. EBITDA* margin fell due to market pressure on has also previously held management positions margins and higher operating costs. within Oracle, Telenor and Kodak.
* Before share-based compensation, expenses related to acquisitions, and restructuring costs. Landsidene
ATEA ASA ANNUAL REPORT 2015 25
Atea in Sweden
Revenue (SEK in million) EBITDA* (SEK in million)
10,779 (+11.3 % ) 355 (+25.0%)
Full-time Employees Cities Revenue (SEK in million) Hardware: 5,885 (55 %) Software: 2,977 (27 %) 2,002 (+132) 32 ( – ) Services: 1,918 (18 %)
Norge: Sverige: Danmark: Finland: Baltikum: Driftsinntekter pr. kategoriSweden is Atea’s largest market,Driftsinntekter representing pr. kategorileveraging Atea’s market strengthDriftsinntekter and winning pr. kategori In 2015, Atea Sweden deliveredDriftsinntekter an EBITDA* pr. kategori of Driftsinntekter pr. kategori
Hardware 36.9 percent of Group revenue in 2015.Hardware Due to new customer agreements. HardwareHardware revenue SEK 355 million, up from SEKHardware 284 million in Hardware the large geographic size of the country and the was up 13.6 percent and software revenue was 2014. The increase in EBITDA* was driven by Software Software Software Software Software Carl-Johan customer preferences for local suppliers, the up 15.4 percent from the prior year. Services higher revenue and an improved EBITDA* margin. Hultenheim Tjenester Swedish business is organized basedTjenester on geog- revenue was flat from 2014, withTjenester high growth The EBITDA* margin increasedTjenester to 3.3 percent in Tjenester (born 1969) raphy. The country is split in five regions, with 32 within contracted services offset by a decline in 2015, up from 2.9 percent in 2014, reflecting a Managing director offices in total. The local offices have their own revenue from subcontracted services. scaling of the cost base relative to revenue. sales persons and consultants, but are supported by centralized back-office functions as well as Atea’s rapid growth in Sweden during the last few Atea had 2,002 full time employees as of 31 Carl-Johan Hultenheim joined Atea in 2003 specialist competence in areas such as security, years has been based on a deliberate strategy December 2015, which is 132 more than at the and has been the managing director of the software licencing and mobility. to take market share by winning new customer end of 2014. Swedish operation since 2011. His previous frame agreements in the public and private sector. experience includes positions as sales and marketing director within Reachin Atea Sweden reported strong growth in revenue Pricing is an important criteria in winning new Technologies, NW Europe Autodesk, and profitability during 2015, as the business customers, and the aggressive growth strategy Intermezzon and Ferator AB. Carl-Johan successfully executed Atea’s strategy of market initially resulted in lower EBITDA margins. Since holds an Engineering degree from University leadership. Total revenue was SEK 10.8 billion, 2013, EBITDA margins have steadily improved as of Växjö with complementary economics an increase of 11.3 percent from the prior year. the company has grown its revenue faster than and business administration studies from Growth came from sales of products, where its operating expenses. Lund and Stockholm University. the organization has been very effective in
* Before share-based compensation, expenses related to acquisitions, and restructuring costs. Landsidene
ATEA ASA ANNUAL REPORT 2015 26
Atea in Denmark
Revenue (DKK in million) EBITDA* (DKK in million)
6,399 (+10.3%) 305 (-6.7%)
Full-time Employees Cities Revenue (DKK in million) Hardware: 3,856 (60 %) Software: 1,040 (16 %) 1,557 (+20) 7 ( – ) Services: 1,502 (24 %)
Norge: Sverige: Danmark: Finland: Baltikum: Driftsinntekter pr. kategori Driftsinntekter pr. kategoriDenmark is Atea’s second largestDriftsinntekter market, pr. kategorimanagers, who now work forDriftsinntekter a competing pr. kategori increase in services was basedDriftsinntekter on the acquisition pr. kategori
Hardware Hardware representing 27.5 percent of Group revenueHardware in company. The possible bribery caseHardware is described of Axcess in Q4 2014. Hardware 2015. The Danish business has the most further detail in Note 24 of this report. Since the Software Software Software Software Software developed operations within datacenter services charges were announced in June 2015, Atea Atea in Denmark reported an EBITDA* of DKK Tjenester Morten Felding Tjenester across Atea. Since the acquisition of TjenesterAxcess in management has cooperated fullyTjenester with Danish 305 million in 2015, down from DKKTjenester 327 million in (born 1965) December 2014, the company has also enhanced law enforcement in the investigation. 2014. EBITDA* margin decreased to 4.8 percent Managing director its leadership position within communications in 2015, down from 5.6 percent in 2014. EBITDA* and network security. Despite the negative impact of the investigation, margin decreased mainly due to higher opera- Atea Denmark reported strong growth in revenue tional costs as the organization had planned for Morten Felding joined Atea as managing Due to the small size of the country Atea has fewer for the full year 2015. Growth slowed during the higher growth than it achieved in 2015. director in 2014. He has previously worked offices in Denmark and a different organizational second and third quarter, immediately following as Managing Director of Philips Denmark and structure than in the geographically larger neigh- the announcement of the investigation, but picked Following the announcement of the bribery inves- Xerox Denmark, and held other management roles within these companies. Morten holds bouring countries of Sweden and Norway. The up at the end of the year. tigation in June 2015, Atea Denmark took actions a Bachelor of Science in Organization & organizational structure in Denmark is based on to lower its cost base, including the reduction of Strategy and Bachelor of commerce from business areas with specialized competences Total revenue was DKK 6.4 billion, an increase staff. The costs of these employees were however Copenhagen Business School (CBS), such as networks, servers, print, PC’s etc. The of 10.3 percent from 2014. Hardware revenue carried throughout most of the remainder of the and has participated in executive training products and services from these business areas was up 7.4 percent, software revenue was up year, and had a negative impact on the full year programs at Insead in France. is then sold through a central sales organization 10.8 percent, and services revenue was up 18.0 result. As of 31 December 2015, Atea Denmark with representation in each of the offices. percent from the prior year. The increase in had 1,557 full time employees as of 31 December product revenue was driven by a higher demand 2015, which is 20 more than at the end of 2014. Business activity in 2015 was negatively impacted for datacentre and network products, and the by a bribery investigation involving former Atea * Before share-based compensation, expenses related to acquisitions, and restructuring costs. Landsidene
ATEA ASA ANNUAL REPORT 2015 27
Atea in Finland
Revenue (EUR in million) EBITDA* (EUR in million)
207 (+1.4%) 2 (-27.2%)
Full-time Employees Cities Revenue (EUR in million) Hardware: 102 (49 %) Software: 84 (41%) 315 (-11) 13 ( – ) Services: 21 (10 %)
Norge: Sverige: Danmark: Finland: Baltikum: Driftsinntekter pr. kategori Driftsinntekter pr. kategori Driftsinntekter pr. kategoriAtea in Finland represented 6.6 percentDriftsinntekter of Atea's pr. kategorisegment and the public sector,Driftsinntekter but growth pr. kategori in During the third quarter of 2015 Atea signed
Hardware Hardware Hardware total revenue in 2015. Atea has a lowerHardware market these segments has only been ableHardware to offset the large public frame agreements with the Finnish share in Finland than in the other countries in decline from the large multinationals. Defence Forces and with the central purchasing Software Software Software Software Software which it competes. This lower market share unit for Finnish municipalities (Kuntien Tiera). Tjenester Tjenester Juha Sihvonen Tjenester impacts the profitability of the business,Tjenester as Atea Atea in Finland reported revenueTjenester of EUR 207 These customers did not generate significant (born 1968) does not have the same scale advantages in million for the full year 2015, an increase of 1.4 revenue for Atea in 2015, but are expected to Managing director Finland as in its other markets. Most of Atea’s percent from 2014. Hardware revenue was up drive stronger revenue growth in 2016 as they employees in Finland work in Helsinki, where 3.1 percent, software revenue up 1.1 percent, begin purchasing on the new frame agreements. market for IT infrastructure is most concentrated. and services revenue was down by 5.2 percent. Juha Sihvonen joined Atea as managing Outside of Helsinki, Atea has offices in the major Overall revenue growth was impacted by a weak Atea had 315 full time employees in Finland as director for the Finnish operation in 2008 regional cities in the southern part of the country. demand environment, lower volumes to some key of 31 December 2015, a reduction of 11 from and has experience as Senior Vice President customers and fewer consultants compared to the prior year. and Deputy CEO in Digia Plc, CEO and several other positions in Sentera Plc, and The Finnish economy has suffered from an last year. Sales Manager in Industri-Matematik and in economic downturn during the last few years, Computer Associates. Juha holds a MBA from which has had a negative impact on demand for Atea in Finland reported an EBITDA* of EUR 2.3 Henley Management College in London and IT infrastructure. The downturn in the economy million for the full year 2015, down from EUR Bachelor’s degree in Business Information has to a large extent been driven by large multi- 3.1 million in 2014. The main reason for lower Technology in Helsinki. national companies, which historically was the EBITDA* was a decline in gross margin as a result core of Atea’s customer base. Atea has been of the challenging market environment. able to turn its business more towards the SMB
* Before share-based compensation, expenses related to acquisitions, and restructuring costs. Landsidene
ATEA ASA ANNUAL REPORT 2015 28
Atea in the Baltics
Revenue (EUR in million) EBITDA* (EUR in million)
105 (+11.2 % ) 6 (+34.0%)
Full-time Employees Cities Revenue (EUR in million) Hardware: 62 (59 %) Software: 15 (14 %) 706 (+143) 12 (-1) Services: 29 (27 %)
Norge: Sverige: Danmark: Finland: Baltikum: Driftsinntekter pr. kategori Driftsinntekter pr. kategori Driftsinntekter pr. kategori Driftsinntekter pr. kategoriThe Baltic countries representedDriftsinntekter 3.4 percent pr. kategoriAtea’s revenue in the Baltics was EUR 105.3 sales under the new EU funding program are
Hardware Hardware Hardware Hardware of group revenue in 2015. Atea is presentHardware in all million for the full year 2015, an increase of 11.2 expected to start during the second half of 2016. the three Baltic states of Lithuania, Latvia and percent from the prior year. Growth was driven Software Software Software Software Software Estonia, but reports this as one segment. The by higher sales of services, which increased by Atea in the Baltics reported an EBITDA* of EUR Tjenester Tjenester Tjenester Arunas BartuseviciusTjenester Baltic headquarters is in Vilnius, Lithuania,Tjenester which 59.0 percent compared with 2014, mostly as a 5.8 million in 2015, up from EUR 4.3 million in (born 1964) is also the largest country in terms of revenue. result of the Baltneta acquisition. 2014. This corresponds to an EBITDA* margin Managing director Lithuania represents approximately 80 percent of 5.5 percent, up from 4.5 percent in 2014. The of total Baltic revenue, with the remaining 20 Otherwise, hardware revenue was down by 1.7 main reason for the increase in EBITDA* was the percent being split more or less evenly on Latvia percent and software revenue was up by 7.8 acquisition of Baltneta. Arunas Bartusevicius founded Sonex Group and Estonia. percent from 2014. in 1991, which was acquired by Atea in 2007. Atea in the Baltics had 706 full time employees Arunas holds an International EMBA from the In April 2015 Atea acquired Baltneta, which is Revenue from products fell at the end of the year, at the end of 2015, which is 143 more than at Baltic Management Institute and a MSc. from Vilnius University. the leading cloud and IT outsourcing provider in based on weaker demand from the public sector. the end of 2014. Nearly all of the new employees Lithuania. Cloud and IT outsourcing are strategic Demand from the public sector in the Baltics is were the result of the Baltneta acquisition. business areas for Atea, and the acquisition of heavily impacted by the availability of EU funding, Excluding this acquisition, Atea added 15 Baltneta enables Atea to offer its customers which is dependent on the timing and approval employees in the Baltic organization during 2015. state of the art services within these business of large funding programs. A prior EU funding areas from the Baltic region. program is now mostly complete, and a new funding program has just commenced. The first
* Before share-based compensation, expenses related to acquisitions, and restructuring costs. ATEA ASA ANNUAL REPORT 2015 29
Members of the Board
Ib Kunøe (born 1943) Sven Madsen (born 1964) Chairman of the Board Member of the Board
Ib Kunøe has decades of experience as an entrepreneur and investor in the IT sector. He Sven Madsen is Chief Financial Officer in Consolidated Holdings A/S. He has extensive brings strategic insight and practical experience from building profitable businesses and experience from working with corporate reporting, financing and corporate management from turnaround processes. Kunøe holds an HD Graduate Diploma in Organisation and in companies such as Codan Insurance, FLS Industries, SystemForum and Consolida- Management as well as a background as a professional officer (major). He is the founder ted Holdings. Madsen provides special competence within financial reporting, and is a and owner of Consolidated Holdings A/S and is the main shareholder and Chairman member of the Atea’s audit committee. He holds Board positions with Netop solutions of the Board in a broad variety of Danish owned companies such as Netop Solutions, Solutions, Columbus IT A/S, X-Yachts A/S and DAN-Palletiser A/S. Madsen holds a Columbus IT A/S, X-Yachts A/S and DAN-Palletiser A/S. Ib Kunøe has participated in 8 Graduate Diploma in Financial and Management Accounting as well as an MSc in Business of 8 board meetings in 2015. Economics and Auditing. Sven Madsen has participated in 8 of 8 board meetings in 2015.
Morten Jurs (born 1960) Saloume Djoudat (born 1977) Member of the Board Member of the Board
Morten Jurs has been CEO of Stamina Group AS since 2013. He has prior experience Saloume Djoudat has been a partner in Bull & Co Advokatfirma AS since 2013, coming includes positions as CEO of Pronova BioPharma ASA from 2009 – 2013, as CFO of from a previous position as a General Counsel in Uno-X Energi AS. She specializes in Pronova BioPharma from 2006 – 2009, and as CFO of Kitron ASA from 2001 – 2006. Jurs corporate law including M&A and contract negotiations. Djoudat has managed negotiations brings over 20 years experience within general management and financial administration, and acted as legal adviser in projects both in Norway and for international corporations. In and is a member of Atea’s audit committee. He holds a Master of Science in Business light of her combination of academia and industry experience, Djoudat has a strong ability and Economics/MBA from the University of Wyoming. Morten Jurs has participated in 8 to give legal advice from a business perspective. Djoudat is a graduate of the Faculty of of 8 board meetings in 2015. Law of the University of Oslo. Saloume Djoudat has participated in 5 of 5 board meetings since she joined the Board at the Annual General Meeting in April 2015. ATEA ASA ANNUAL REPORT 2015 30
Lisbeth Toftkær Kvan (born 1967) Truls Berntsen (born 1960) Member of the Board Member of the Board (employee elected)
Lisbeth Toftkær Kvan is Nordic Marketing and Insurance Manager in Ford Credit Nordic. Truls Berntsen joined Atea in 1999 and has many years’ experience within sales manage- She is an experienced financial services executive and previously held the position as ment, human resources management, and organizational development. He has specialized Country Manager in Ford Credit Norway and has additionally been Member of Board and within sales of IT equipment and services, and has technical expertise across a broad range Control Committee as well as Country Manager in GE Capital Solutions AS, Norway. She of IT infrastructure products. Truls has prior board experience from both a group and orga- brings experience within financial services and management to the Atea Board and audit nization level. Truls holds a Mechanical Engineering diploma from Oslo Maritime Technical committee. Her previous roles include Client General Manager in GE Money Bank, UK School and participated in BI Norwegian Business School courses. Truls Berntsen and various other positions within the GE Capital organization in UK and Germany. Kvan has participated in 8 of 8 board meetings in 2015. holds an MSc in International Business Administration from Copenhagen Business School. Lisbeth Toftkær Kvan has participated in 8 of 8 board meetings in 2015.
Marthe Dyrud (born 1979) Stig Penne (born 1973) Member of the Board (employee elected) Member of the Board (employee elected)
Marthe Dyrud holds the positions of Business Manager and has a national responsibility Stig Penne joined Atea in 2007 and holds the position as Sales Manager in Rogaland & for the welfare sector in Atea AS (Norway). She previously functioned as Sales Manager Agder. After having led the infrastructure team for the past three years, Stig is currently in Region East and as project manager for the integration of Umoe IKT into the Atea leading the client division. Previous roles include solution sales in Atea and Telenor. Stig Group. She joined Ementor Norge AS as sales trainee in 2005, and has comprehensive has graduated Rogaland College (teaching), Stavanger College (history) and Norwegian experience within sales management from various positions in Ementor and Atea. Dyrud University of Science and Technology (sports). Prior to his career in IT, Stig was a player has a Bachelor in Electrical and Electronic Engineering from Oslo University College as for the Norwegian national handball team for seven years. Stig Penne has participated in well as a Master in Business Studies from John Moores University in Liverpool, England. 7 of 8 board meetings in 2015. Marthe Dyrud has participated in 8 of 8 board meetings in 2015. ATEA ASA ANNUAL REPORT 2015 31
Board of Directors' Report 2015
Atea managed to deliver strong revenue growth organic growth and selective acquisitions, and HP Inc., Hewlett Packard Enterprise, IBM, grew by 2.4 percent in 2015. This means that Atea and excellent cash flow in 2015, despite several to continuously focus on improving operating Apple, Lenovo, VMware, Citrix, and EMC. These has continued to gain market share in 2015, both challenges within its business units. Sales efficiency. companies view the Nordic region as a critical organically and through acquisitions. grew across all countries and across all of the market for the early adoption of new technologies, company’s major lines of business (hardware, Through its scale of operations, Atea has critical and work closely with Atea to penetrate these The Group's EBITDA before share-based software and services). advantages versus smaller competitors in purcha- markets. This enables Atea to stay at the forefront compensation, acquisition and restructuring costs sing power, local market presence, breadth of of the latest IT trends, and to offer its customers was NOK 951 million for the year, compared with The Group’s EBITDA was flat from last year, with product and service offering, system integration new and innovative IT solutions. NOK 958 million in 2014. The adjusted EBITDA improved performance in Sweden and the Baltics competence, and cost efficient support and margin was 3.4 percent for the year, down from offset by weaker results in Norway, Denmark logistics functions. This is reflected in the long- Financial summary 3.9 percent in 2014. The decline in EBITDA and Finland. Atea has taken steps to improve term financial performance of the Group. Atea’s Income Statement margin was mostly attributable to a lower gross profitability in each of its geographic business leading market position and competence in IT During 2015, revenue for the Group increased by margin on sales of products and services. units during 2016. infrastructure has enabled the company to grow 13.5 percent to NOK 27,904 million. Hardware organically at a rate significantly higher than that revenue, which is Atea's largest business area, Operating profit (EBIT) was NOK 514 million for Company overview of the market. Since 2007, the company has grew by 13.8 percent, services revenue grew 13.2 the year, compared with NOK 584 million in 2014. Atea is the leading provider of IT infrastructure averaged an organic revenue growth rate of 4-5 percent and software revenue grew 12.8 percent. EBIT was impacted by higher depreciation and and related services to organizations within the percent per year, compared with a market growth amortization expenses, which grew to NOK 409 Nordic and Baltic regions. The Group has nearly rate of approximately 2-3 percent. Changes in currency rates impacted Atea’s million in 2015, up from NOK 346 million in 2014. 6,800 employees and is located in 89 cities revenue positively by 4.0 percent in 2015 across Norway, Sweden, Denmark, Finland, In addition to organic growth, Atea has pursued compared with 2014. Therefore, Atea’s revenue Net financial items were NOK -82 million for the Latvia, Lithuania and Estonia. Roughly half of an M&A strategy to further strengthen and growth in constant currency was 9.5 percent in year, compared with NOK -73 million in 2014. Atea’s sales are to the public sector, with the consolidate its market position. Atea’s current 2015. Profit before tax amounted to NOK 432 million remainder of sales to private companies. The organization structure is the result of the merger in 2015, compared with NOK 511 million in 2014. company is headquartered in Oslo, Norway. of the leading IT infrastructure companies in Atea acquired UAB Baltnetos Komunikacijos Denmark, Norway, Sweden and Finland in 2006. (Baltneta) in April 2015. Baltneta provides state- The effective tax rate was 9.1 percent, compared Atea is by far the largest provider of IT infra- Since 2007, Atea has acquired more than 50 of-the-art IT outsourcing and cloud solutions from with 16.0 percent in 2014. The relatively low tax structure within its local markets, and is the companies including the leading IT infrastructure the Baltic region. Baltneta is included in group rate is attributed primarily to a large tax loss carry- second largest provider in Europe. The company company in the Baltic region, at valuation multiples results from its acquisition date. forward in its Norwegian operation. In 2015, the has an estimated 17 percent market share within significantly below those of Atea ASA. company also benefited from currency effects the Nordic and Baltic regions, which is more than 3 Adjusted for acquisitions, Atea’s pro forma growth on intercompany loans and forward contracts. times larger than its second largest competitor. To address the needs of the Nordic and Baltic in constant currency was 4.9 percent. According These currency effects impacted the value of Atea’s business strategy is to strengthen and markets, Atea works closely with leading inter- to consensus estimates from IDC and Gartner, the Group’s deferred tax assets and liabilities, consolidate its market leadership position through national IT companies, such as Microsoft, Cisco, the IT infrastructure market in the Nordic region which resulted in a lower tax expense for the Key figures, nøkkeltall ATEA ASA ANNUAL REPORT 2015 2015 32
year. Further information on taxes can be found Sweden is the largest business unit in the Atea adjusted EBITDA of 30.0 percent. Based on poor Revenue 2011 – 2015 (NOK in million) in Note 9 of the Group’s 2015 financial reporting. group, representing 36.9 percent of the Group’s financial performance, Atea made changes to its Key figures, nøkkeltallrevenue. Atea had excellent performance in Norwegian management, and reduced staff in The net profit for the year was NOK 393 million Sweden in 2015, with 11.3 percent growth in Norway during 2015. 30,000 1,000 in 2015, compared with NOK 429 million in 2014. revenue and 25.0 growth in adjusted EBITDA. 25,000 2015 750 20,000 This represents a basic earnings per share of The business has successfully executed Atea’s Finland represented 6.6 percent of Atea’s 2011: 20,228 15,000 500 NOK 3.76 in 2015 compared with NOK 4.14 in strategy of market leadership, and managed to revenue in 2015. The business had revenue 2012: 20,930 2014. both aggressively gain market share and improve growth of 1.4 percent and a decline in adjusted 10,000 2013: 22,096 250 operating margins. EBITDA of 27.2 percent. Finland has struggled 5,000 2014: 24,588
0 2015: 27,904 0 In accordance with section 3-3a of the Norwegian with lower software margins and weaker services 11 12 13 14 15 11 12 13 14 15 Accounting Act, the Board of Directors confirms Denmark is the second largest business unit, with revenues than in 2014. During the third quarter that the prerequisites for continued operations 27.5 percent of the Group’s revenue. Sales in of 2015, the business signed major new frame have been met, and that the financial statements Denmark were negatively impacted by a bribery agreements with the Finnish Defence forces and Revenue, Konsern Revenue per country EBITDA, Konsern have been prepared on a going-concern basis. investigation involving former Atea employees the central purchasing unit for the Finnish munici- which was announced in June 2015. Atea palities. On the basis of these frame agreements, Segmentation Denmark had total revenue growth of 10.3 Atea expects much stronger growth in Finland EBITDA* Atea has commercial operations in Norway, percent in 2015, based almost entirely on the in 2016. 2011 – 2015 (NOK in million) Sweden, Denmark, Finland and the Baltics. acquisition of Axcess in December 2014. The These geographic regions have 30,000their own mana- business reported a decline in adjusted EBITDA The Baltics represented 3.4 percent of Atea’s 1,000 gement, and are reported as separate25,000 operating of 6.7 percent. In order to improve profitability, the revenue in 2015. Atea had 11.2 percent revenue 750 segments. There is also a Shared20,000 Services business reduced staff during the second half of growth in 2015 and 34.0 percent growth in adjus- 2011: 871 15,000 500 operating segment, which encompasses support 2015. The cost reductions will have a full impact ted EBITDA. Atea Baltics acquired Baltneta in 2012: 824 functions such as Atea Logistics 10,000and Atea Global on operating expenses in 2016. April 2015, a leading provider of IT outsourcing 2013: 800 250 Services. 5,000 and cloud services based in Lithuania. The 2014: 958 0 Norway is Atea’s third largest business unit, company saw demand slow during the end of 0 2015: 951 11 12 13 14 15 11 12 13 14 15 The financial performance of each business unit with 26.0 percent of the Group’s revenue. The the 2015, based on the timing of EU-funded IT is presented on Note 5 of the Group financial Norwegian economy is heavily exposed to the projects to the public sector. This slowdown is * Before share-based compensation, expenses/income related to acquisitions, and restructuring costs. report. A brief summary of business performanceRevenue, Konsern oil and gas sectors, and theRevenue downturn per country in these expected to continue during the first half 2016, EBITDA, Konsern in each unit follows: markets has negatively impacted the market with a pickup in the second half as a new round for IT infrastructure. Overall, Atea had revenue of EU-funded projects is launched. growth of 6.8 percent in 2015, and a decline in ATEA ASA ANNUAL REPORT 2015 33
Balance Sheet and Cash Flow Baltneta. In 2014, the cash flow from investments grown at a rate of approximately 2-3 percent closely with at least two primary vendors in each As of 31 December 2015, the Group had total was negative NOK 652 million, of which NOK since 2007. Since 2007, the market declined in product category to boost competition and avoid assets of NOK 13,731 million. Current assets such 196 million was capital expenditures and the only one year (2009) and returned to growth the vendor risk. as cash, receivables and inventory represented remaining NOK 457 million was used to conduct following year. NOK 8,252 million of this total. Non-current acquisitions. Financial risk assets represented NOK 5,479 million of this Atea’s share of the IT infrastructure market has Financial risk management for the Group is the total, and primarily consisted of goodwill (NOK Cash flow from financing was negative NOK grown steadily over time, both through organic responsibility of the central finance department, 3,815 million), deferred tax assets (NOK 553 950 million in 2015. The negative cash flow from growth and through acquisitions. The company in compliance with guidelines approved by the million), and fixed assets. financing was primarily due to dividend payments benefits from a unique competitive position, in Board of Directors. The Group’s finance depart- of NOK 679 million in 2015, with the remainder which it is by far the largest player in the Nordic ment identifies and evaluates financial risk and The Group had total liabilities of NOK 10,252 allocated to pay down outstanding debt. and Baltic markets, with the widest office ensures that the necessary measures are carried million as of 31 December 2015, of which NOK network, and the broadest offering of products, out in close cooperation with the respective 8,790 million were current liabilities. Group The Group’s net cash flow was negative NOK 22 services and system integration competence. operating units. equity was NOK 3,480 million at the end of million in 2015. In addition, currency fluctuations 2015, compared with NOK 3,549 million at the increased the cash balance by NOK 69 million Based on its market and competitive advantages, In order to ensure financial stability in the event of end of the previous year. The equity ratio was during the year. The Group’s cash balance was the company develops stable long-term relations adverse market conditions, the Group maintains 25.3 percent, compared with 28.1 percent for NOK 630 million at 31 December 2015, compared with its customers. Approximately half of Atea’s a healthy balance of debt, equity and working the previous year, due to payment of dividends with NOK 583 million at 31 December 2014. revenue comes from the public sector, in which capital. The Group’s goal is to have an equity and an increase in total assets. demand is less sensitive to changes in the econo- ratio in excess of 20 percent, as well as maximum At the end of 2015, Atea had a net financial mic cycle. Many of Atea’s customer contracts, operational gearing (net interest-bearing debt The Group’s cash flow from operations was NOK position (cash, less net interest bearing debt) of especially in the public sector, are frame agre- divided by pro forma EBITDA) of 2.5. 1,287 million in 2015, compared with 959 million negative NOK 750 million. The company’s interest ements in which the customer selects Atea as in 2014. The increase in cash flow from operations bearing debt is primarily in long-term loan facilities an IT partner for a term of roughly 3 – 5 years. The company is exposed to foreign currency was driven by actions taken to reduce net working with Nordea. In addition, Atea has NOK 300 In addition, a large and growing portion of the fluctuations, especially from the Swedish krona capital during 2015. Atea significantly improved million of senior unsecured bonds outstanding company’s service revenue comes from managed (SEK), the Danish krone (DKK), US dollars (USD) its invoicing and collections routines, and bene- which are due to mature in June 2018. service contracts of one year or more. and the Euro (EUR), since part of the company’s fited from longer average payment terms from revenues and purchases of goods are in foreign vendors compared with last year. Risk factors The company is exposed to pricing and perfor- currencies. It is company's policy that all signifi- Market risk mance risk from its key vendors. Due to Atea’s cant, committed goods or loan transactions with Cash flow from investments was negative NOK The market for IT infrastructure has historically position as the second largest IT infrastructure foreign currency exposure are to be hedged with 360 million in 2015. Capital expenditures maintained a relatively stable growth rate through- provider in Europe, the company has strong rela- forward contracts. The company is also exposed comprised NOK 291 million of this total, while the out the economic cycle. According to data from tions and significant negotiating power with its to fluctuations in interest rates, since parts of remaining 68 million was used for the acquisition of IDC, the Nordic market for IT infrastructure has key vendors. When possible, the company works the company's debt have floating interest rates. ATEA ASA ANNUAL REPORT 2015 Styrets beretning 34
Credit risk Atea’s long-term success is dependent on For the Group, absence due to illness was 1.9 Change in number of full-time employees Historically, the Group has seen very few losses recruiting skilled IT professionals, and providing percent, down from 2.3 percent in 2014. Absence 2011 – 2015
on receivables. The Group has not experienced its employees15 with a work environment in which due to illness1,000 was 2.7 percent in Norway, 1.1 7,000 Styretsmaterially greater beretning losses on receivables in 2015 they can develop and contribute their talents. percent in Sweden, 1.6 percent in Denmark, 1.8 6,000 750 5,000 than in previous years. No agreements relating This work10 environment and culture is central to percent in Finland, 2.3 percent in the Baltics and to offsetting claims or other financial instruments Atea’s vision of being “The Place to Be” for its 2.6 percent in Shared Services. Absence due 4,000 500 2011: 5,781 have been established that would minimize the employees, customers and vendors. to illness of 5.2 percent was registered for the 3,000 5 2012: 6,185 2,000 company’s credit risk; however, the Group has a parent company250 in 2015, up from 4.2 in 2014. 2013: 6,280 1,000 high focus on credit assessment and collections. Common guidelines have been established for 2014: 6,504 0 0 0 recruitment activities,09 10 11to ensure12 13 that Atea is The risk of occupational09 10 11 injury12 13is very low. In 11 12 13 14 15 2015: 6,779 Liquidity risk attracting and hiring skilled professionals across 2015, there were no occupational injuries resul-
The company considers its liquidity risk to be the organization. Extensive competence training ting in absence. Antall ansatte Antall opkjøp, Operasjonell kontantstrøm Utvikling antall fulltids ansatte pr. 31 desember 2015 limited. Atea has significant liquidity reserves is conducted2009-2013 in all parts of the organization. 2009-2013 2011-2015 available through credit facilities with its primary Employee surveys, and goal and development Equality of opportunity bank. interviews with employees, are held regularly. Diversity and gender equality are core values Number of employees at Atea. The Group strives to provide a work At 31 December 2015 Atea’s bond covenants require that the company’s An introduction program has been implemented environment that is free from discrimination on net debt balance15 remain below 2.5 times its in every country1,000 to quickly integrate new employ- the basis7,000 of gender, nationality, religion, skin 6,000 pro forma EBITDA for the last twelve months ees. This includes750 training in Atea's business color, sexual orientation, age or disability. 5,000 (including acquired10 companies). At the end of systems, values, ethical guidelines and corporate 4,000 Norway: 1,657 500 2015, Atea’s net debt / EBITDA ratio was 0.8, culture. All employees are required to success- At 31 December3,000 2015, women represented 20.7 Sweden: 2,002 5 resulting in an available liquidity reserve of NOK fully complete an examination on Atea’s Code of percent of2,000 the Group's employees, compared with Denmark: 1,557 250 1,573 million before the debt covenant is reached. Conduct, and sign a confirmation that they will 21.0 percent1,000 at the end of the previous year. In Finland: 315
0 0 0 The Baltics: 706 09 10 11 12 13 comply with the Code.09 10 11 12 13 the parent company,11 12 the13 percentage14 15 of women Group Shared Personnel and Organization was 11.1 percent, compared with 16.7 percent for Services/parent The Group had 6,779 full-time employees at Health, safety and the work environment the previous year. There are nine employees in company: 542 Antall ansatte 31 December 2015,Antall a opkjøp,net increase of 275 from Atea has worked systematicallyOperasjonell kontantstrøm to promote health the parent company,Utvikling antalland fulltids eight ansatte of these are men. pr. 31 desember 2015 1 January 2015. The2009-2013 average number of full-time among employees2009-2013 and to improve safety and 2011-2015 equivalents employed by the Group was 6,716 in environmental standards at the workplace. The The low percentage of female employees within 2015, compared with 6,204 in 2014. The main company provides a healthy lunch offering to its the Group reflects the IT industry in which the driver behind the increase in average FTE’s was employees in its largest offices and encourages company operates. The Group works syste- the acquisition of new companies. participation in athletics through Atea-sponsored matically to recruit women at all levels and to sporting events. encourage that they remain with Atea. ATEA ASA ANNUAL REPORT 2015 35
Atea provides a suitable work environment for technology companies. The Group does not of Directors proposes that the entire net profit sources. This information must be available employees with disabilities. The company modi- manufacture its own products, and distribution of Atea ASA be transferred to retained earnings. wherever it may be required, within or outside fies the physical environment of the workplace is mainly outsourced to distribution partners. the workplace. Finally, IT systems must allow as necessary to facilitate employees with special For this reason, there is relatively low pollution Based on the company’s market position, cash individuals to communicate, collaborate and be needs. associated with Atea's own operations. flow generation, investment requirements and productive across a broad range of technology liquidity reserves, the Board of Directors proposes platforms. Corporate Governance Atea is conscious of pollution associated with to the General Meeting a dividend of NOK 6.50 Atea’s guidelines for Corporate Governance the use of IT products, and was one of the first per share, to be paid in two equal instalments of As a result of these trends, the number of unique are in accordance with the Norwegian Code of companies to focus on Green IT. The Group NOK 3.25 in May and October 2016. Based on devices for capturing or receiving data is rapidly Practice for Corporate Governance, dated 30 has several business initiatives to minimize the number of shares outstanding at the end of increasing, and the amount of data which is October 2014, as required for all listed companies the environmental impact of IT, including 2015, this would represent a dividend payment transferred between them and the data center on the Oslo Stock Exchange. Furthermore, the www.goITgreen.com. In addition, Atea's recycling of NOK 680 million. is growing exponentially. At the same time, the guidelines meet the disclosure requirements of initiative www.goITloop.com makes it easy for risk of security breaches becomes ever greater. the Norwegian Accounting Act and the Securities customers to dispose used IT equipment in Business Outlook All of this creates a level of complexity which IT Trading Act. a safe, economical and environmentally Market trends departments struggle to support. responsible manner. According to market estimates from IDC, the The guidelines are included separately in this market for IT infrastructure and related services in Through its breadth of competency and depth annual report. Atea's Green IT business initiatives have proven the Nordic region grew at a rate of approximately of system integration expertise, Atea supports to be of great value to customers and the environ- 3 percent per year from 2007 – 2015. IT departments in adapting to the growing Corporate Social Responsibility ment. Atea participates in a number of recognized complexity of today’s IT infrastructure and Atea observes the UN Global Compact's 10 and carefully selected national and internatio- The Board expects that the market for IT infra- security. Atea helps its customers to design, principles in the areas of human rights, labor nal environmental initiatives, including the UN structure will continue to grow in future years. implement and support IT solutions tailored for rights, the environment and anti-corruption, and it Global Compact and Carbon Disclosure Project. Across private enterprise and throughout the their organization. gives particular priority to the environmental The company's environmental work is described public sector, organizations are increasingly principles. in greater detail within the annual Corporate relying on new and innovative IT solutions to In recent years, the company has invested in Sustainability report on Atea’s website. improve productivity and living standards. While expanding its offering within a number of areas More information on the company’s social the specific applications for information tech- which are of growing interest for customers. responsibility policies and initiatives is available Allocation of Net Profit nology are unique for each organization, the These include: in a separate annual Corporate Sustainability Atea ASA is the parent company for the Group. changing demands on internal IT departments report on Atea’s website. The parent company has a total of 9 employees, follow several common themes. Mobility solutions including the Group's CEO, CFO and associated Employees expect to access information wherever Environmental initiatives staff functions. The net profit for the year of Organizations require their IT infrastructure to they are and on whatever device they find appro- Atea sells hardware and software which is Atea ASA was NOK 619 million, compared with efficiently and securely capture, process and priate, including smartphones, tablets and note- developed and manufactured by international a profit of NOK 335 million in 2014. The Board store ever larger amounts of data from diverse book computers. Atea provides a broad range of ATEA ASA ANNUAL REPORT 2015 36
IT infrastructure, from clients to software to data Atea has seen rapid growth in demand for IT implemented at the customer’s data center, local service delivery organizations, and system center solutions, which enable IT departments to security solutions. or managed from Atea’s own data centers. integration expertise. The company is currently securely meet these mobility requirements. In many cases, the customer is best served expanding its IT as a Service offering to several Collaboration tools by a “hybrid” approach – with information new concepts such as videoconferencing, digital IT security As employees become more mobile and spread accessed from multiple data centers, and inte- signage and networks. As networks open to new devices and handle ever across geographies, organizations are relying grated according to the customer’s specific greater volumes of data, the risk of unauthorized more heavily on collaboration tools to enable requirements. Financial objectives / 2016 Outlook access to sensitive information and communi- teams to work together productively. Atea has Atea has clear financial objectives for its business cations has grown dramatically. It has become been on the forefront of this trend, and provides Cloud computing is an area in which Atea’s which cover revenue growth, market share, oper- routine for the media to report on major IT security a full range of collaboration solutions for the experience with leading software vendors, and ating margins and cash flow. The Group aims to incidents at large corporations or branches of workplace and data center, including solutions competence within data centers, system inte- maintain a rate of organic revenue growth faster government, and most IT security breaches are for information sharing, conferencing systems, gration, and IT security can greatly differentiate than the market and to consistently improve its never even detected or known to the public. and work coordination tools. Atea’s offering from smaller IT infrastructure operating profit margin over time. providers. Atea has seen growing customer inter- IT crimes can be highly profitable for an attacker Cloud computing est in its cloud computing offering and views this In addition to organic growth, Atea plans to and damaging for the intended target, with a rela- Cloud computing is a model for IT service delivery area as a large business opportunity. further strengthen its market position through tively low risk of prosecution. This has resulted in which IT infrastructure and applications are selectively acquiring companies, with a longer- in attackers becoming increasingly sophisticated accessed remotely via the internet. In many “IT as a Service” term goal to achieve a market share of above 20 in the tactics and malware which they use to cases, the service is delivered by a third party IT as a Service is a commercial model in which percent. Finally, the company seeks to increase penetrate networks and capture data. under an “IT as a Service” model. organizations procure IT solutions from a service its free cash flow through profit growth and provider at a fixed fee for use (e.g., monthly fee strong cash conversion, enabling a high dividend Traditional models for preventing a breach of When implemented effectively, cloud computing per user). The service provider is then responsible payout to investors. IT systems, such as access control, firewalls can reduce an organization’s IT costs, improve for delivering the IT solution and maintaining an and antivirus solutions, are still vital but not performance, and greatly enhance access to agreed service level. Atea achieved its financial objectives of growth sufficient to manage today’s threat landscape. information. At the same time, cloud computing in revenue, market share and cash flow during Organizations need a comprehensive strategy creates legitimate concerns about security, IT as a Service is particularly popular among 2015, but had a lower profit margin compared for IT security, including systems for protecting integration, and the loss of control over data. small- and midsize organizations, as it enables with 2014. access points, networks, data and applications, these organizations to procure IT without high as well as solutions for intrusion detection, Atea works with its customers to design and upfront investments or large IT organizations, and Atea’s revenue grew to a record NOK 27.9 billion incident response and business recovery. implement cloud computing solutions tailored in a way which is flexible to their changing needs. as Atea continued to capture market share from As the leading IT infrastructure company in the to the customer’s specific needs and system smaller competitors in a highly fragmented IT Nordic and Baltic region, and as a specialist in integration requirements. These cloud solutions Atea is well-positioned to take advantage of the IT infrastructure market. These smaller competitors solution architecture and system integration, can be sourced from software vendors, as a Service trend, with its strong market position, lack Atea’s purchasing power with major IT ATEA ASA ANNUAL REPORT 2015 37
companies or its strong local presence in Atea has taken action to improve its profit been hired as Senior Vice President in Atea ASA, regional markets. Furthermore, they cannot margins in 2016. On the cost side, Atea reduced with responsibility for shared service operations, provide the full range of products, services and staff in Denmark and Norway during the second vendor relations and group business initiatives. system integration competence which customers half of 2015, and has cut spending in other areas. Michael Jacobs has been hired as Managing require within today’s increasingly complex IT Additionally, the Group is implementing initiatives Director of Norway, with a strong track record environments. to further realize economies of scale through its of experience from executive positions in purchasing agreements with vendors and through Microsoft and Dell. Finally, the Group established Atea’s cash flow from operations grew to a record its logistics center in Växjo, Sweden. Also, the a Compliance organization within Atea, to focus NOK 1,287 million as Atea continued to improve Group is standardizing service management on maintaining sound practices within corporate cash conversion. Atea significantly improved its and backoffice functions, and plans to expand ethics, control and social responsibility. invoicing and collections routines, and benefited its shared service center in the Baltic region for from longer average payment terms with vendors, administration of non-customer facing activities. Overall, the Group expects that it will continue to compared with last year. As a result, net working achieve revenue growth faster than the market capital fell sharply, resulting in higher cash flow On the revenue side, Atea is expanding its in 2016, with improved profit margins compared from operations. managed service offering, with the opportunity with 2015. Cash conversion is expected to to increase margins. IT-as-a-service leverages remain strong, enabling the company to maintain At the same time, Atea’s adjusted EBITDA margin Atea’s ability to combine products and services its dividend policy to shareholders. fell to 3.4 percent in 2015, from 3.9 percent in as well as financing to add value for the customer. 2014. This decline in operating margins was Furthermore, Atea is developing its competence Based on its leading position in IT infrastructure primarily due to lower gross margins within in specific product areas with higher margin and in the Nordic and Baltic region, and with initiatives software and services. Furthermore, operating value added, such as networking, IT security and to improve revenue and profitability, Atea is well expenses grew faster than revenue in 2015, as data management solutions. positioned to meet its key financial objectives of the Group planned for a higher level of activity in growth in revenue, market share, profitability and Denmark and Norway than was achieved during The Group took steps to strengthen its manage- cash flow in 2016. the year. ment during the past year. Tommy Ødegaard has ATEA ASA ANNUAL REPORT 2015 38
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge that;
• the consolidated financial statements for 2015 have been prepared in accordance with IFRS as adopted by EU , as well as additional information requirements in accordance with the Norwegian Accounting Act, and that • the financial statements for the parent company for 2015 have been prepared in accordance with simplified IFRS pursuant to section 3-9 of the Norwegian Accounting Act, as well as additional information requirements in accordance with the Norwegian Accounting Act, and that • the information presented in the financial statements gives a true and fair view of the Company’s and Group’s assets, liabilities, financial position and result for the period viewed in their entirety, and that • the Board of Directors’ report gives a true and fair view of the development, performance and financial position of the Company and Group, and includes a description of the principal risks and uncertainties.
Oslo, 16 March 2016
Ib Kunøe Morten Jurs Saloume Djoudat Sven Madsen Chairman of the Board
Lisbeth Toftkær Kvan Marthe Dyrud Truls Berntsen Stig Penne Steinar Sønsteby CEO ATEA ASA ANNUAL REPORT 2015 39
Shareholder Information
Atea’s objective is to provide a competitive equal instalments of NOK 3.25 during May and regular meetings with investors and analysts to long-term return to shareholders, relative to the October. In 2016, the Board proposes that the enhance communication. More information can Robert Giori (born 1970) underlying risk of the Company’s operations. The AGM approves a dividend of NOK 6.50 per share, be found on Atea’s investor pages online at www. CFO of Atea ASA Company endeavours to achieve this objective to be paid in two equal instalments of NOK 3.25 atea.com/IR. through a high dividend payout and through during May and October. capital appreciation on the value of the underlying Share capital and Robert Giori joined Atea as Chief Financial business. Atea’s capital structure includes both share- shareholder structure Officer in 2014. He has extensive experience holder equity and debt. At the end of 2015, At 31 December 2015, the VPS registered share in financial management for public companies The company’s dividend policy is to return at least the Company had NOK 750 million in net debt, capital in the company was NOK 1,051,707,110, within the IT industry. Prior to joining Atea, 70 percent of its annual free cash flow (cash compared with NOK 829 million at the end of divided into 105,170,711 shares with a nominal Robert spent over five years as Chief Financial flow from operations, less capital expenditures) 2014. The Company has NOK 300 million in value of NOK 10 per share. Atea has one class Officer of Nordic Semiconductor ASA. He to shareholders in the form of a dividend payout. unsecured bonds outstanding, with a covenant of shares, with each share carrying one vote. Ib has also worked as Chief Financial Officer of During 2015, the Company paid dividends of that its net debt must remain below 2.5 times Kunøe, Chairman of the Board, with associated TeleComputing ASA and as Finance Director for Dell’s operations in Norway. In addition, NOK 6.50 per share to shareholders in two pro forma EBITDA for the prior twelve months companies and close associates, was the largest he has previously been a consultant with (EBITDA includes any acquisitions made during shareholder controlling 25.0 per cent of the McKinsey & Company. this period). At the end of 2015, the company’s shares at the end of 2015. Otherwise, Atea ASA FINANCIAL CALENDAR 2016 net debt was 0.8 times pro forma EBITDA, indi- has a diversified shareholder structure, with a Robert Giori has an MBA from Harvard cating that its debt balance was well below its total of 7,153 shareholders at the end of the year. University and a Bachelor degree from Atea ASA will publish quarterly interim covenants. Stanford University. He has completed accounts and provisional annual Share performance the Certified Public Accountant (CPA), Certified Management Accountant (CMA) accounts on the following dates: Investor relations • At the end of 2015, Atea’s share price was and Chartered Financial Analyst (CFA) Atea aims to increase investor awareness of NOK 73.50 compared with NOK 77.00 end 1st quarter 2016: Tuesday 26 April 2016 examinations in the United States. the Company through an open, transparent and of 2014. 2nd quarter 2016: Thursday 14 July 2016 reliable information policy. In this manner, the • During 2015, a dividend payout of NOK 6.50 Company seeks also to promote the liquidity of per share was made to shareholders, yielding 3rd quarter 2016: Thursday 20 Oct 2016 its shares and ensure that its share price reflects a direct return of 8.4 per cent compared to the • During 2015, 49 million shares in Atea were 4th quarter 2016 and provisional accounts the fair value of the Company. share price at the end of 2014. traded (compared with 46 million in 2014). for 2016: Wednesday 8 February 2017 • The total return on the Company’s shares • Each share was on average traded 0.5 times Presentations will be held for shareholders, brokers during 2015 was 3.9 percent, including the in 2015 (0.4 times in 2014). Annual General Meeting: and analysts in connection with the quarterly dividend yield and share price depreciation • At the end of 2015, the number of shareholders Tuesday 26 April 2016 and annual reporting dates. Furthermore, Atea from NOK 77.00 to NOK 73.50. was 7,153, up from 7,103 at the start of the Visit www.atea.com/IR for more keeps the financial markets informed of important • The share’s highest close price during 2015 year. shareholder information. developments through stock exchange and press was NOK 94.25 on 22 April and its lowest releases, and other market updates. Atea holds close price was NOK 66.00 on 17 August. ATEA ASA ANNUAL REPORT 2015 40 Kursutvikling
Share value development (%): Main Shareholders 1) 2 January 2015 - 30 December 2015 Atea - Total return OSEBX - Total return at 31 December 2015 Name Shares % of total 25
20 Systemintegration APS 2) 25,993,510 24.7 % 3) 15 State Street Bank & Trust Co. 8,813,985 8.4 % Folketrygdfondet 7,679,966 7.3 % 10 RBC Investor Services Trust 3) 5,304,995 5.0 % 3) 5 JP Morgan Chase Bank, NA 3,850,217 3.7 % J.P. Morgan Chase Bank N.A. London 3) 3,400,437 3.2 % 0 Skandinaviske Enskilda Banken AB 3) 2,735,376 2.6 % -5 Odin Norge 2,628,887 2.5 % VPF Nordea Kapital 2,488,872 2.4 % -10 The Bank of New York Mellon 3) 2,040,872 1.9 % -15 Other 40,233,594 38.3 % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total number of shares 105,170,711 100.0 %
1) Source: Verdipapirsentralen 2) Includes shares held by Ib Kunøe 3) Includes client nominee accounts
Analysts following Atea: Ownership structure by number of shares: Proportion of Total no of Company Name Telephone No of shares held No of shareholders share capital shares held
ABG Sundal Collier Alexander Høst + 47 22 01 60 98 1 - 100 4,027 0.1 % 139,593 Arctic Securities Oscar Semb Fredricsson + 47 21 01 32 11 101 - 1, 000 2,184 0.8 % 852,341 Arctic Securities Henriette Trondsen + 47 21 01 32 84 1, 001 - 10, 000 701 2.2 % 2,269,253 Carnegie Håvard Nilsson + 47 22 00 93 78 10, 001 - 100, 000 162 5.0 % 5,220,626 Danske Bank Markets Martin Stenshall + 47 85 40 70 73 100, 001 - 500, 000 50 10.9 % 11,4 4 8 , 28 6 DnB Markets Christer Roth + 47 24 16 91 81 500, 001 - 29 81.0 % 85,240,612 SEB Fredrik Thoresen + 47 21 00 85 54 7,153 100.0 % 105,170,711 Fondsfinans Erik Hjulstrøm + 47 23 11 30 64 ATEA ASA ANNUAL REPORT 2015 41 ATEA ASA ANNUAL REPORT 2015 42
Atea Group Financial Statements
Content
Consolidated Income statement 43 Note 6 – Employee benefit expense and remuneration 60 Note 17 – Trade payables and other current liabilities 75 Consolidated statement of Comprehensive Income 44 Note 7 – Other operating expenses 62 Note 18 – Borrowings 75 Consolidated statement of Financial Position 45 Note 8 – Net financial items 62 Note 19 – Liquidity reserve 76 Consolidated statement of changes in Equity 46 Note 9 – Taxes 63 Note 20 – Provisions 77 Consolidated statement of Cash Flow 47 Note 10 – Earnings per share 66 Note 21 – Classification of financial instruments 78 Note 1 – General information 48 Note 11 – Property, plant and equipment 67 Note 22 – Corporate structure of the Atea Group 79 Note 2 – Summary of significant accounting principles 48 Note 12 – Goodwill and intangible assets 70 Note 23 – Business combinations 80 Note 3 – Financial risk and capital management 54 Note 13 – Investments in associated companies 71 Note 24 – Contingent liabilities and assets 83 Note 4 – Critical estimates and judgments in applying the Note 14 – Inventories 72 Note 25 – Commitments 83 entity’s accounting policy 58 Note 15 – Trade and other receivables 72 Note 26 – Related parties 84 Note 5 – Segment information 58 Note 16 – Paid-in equity, options and shareholders 73 Note 27 – Events after the balance sheet date 84 ATEA ASA ANNUAL REPORT 2015 43
Consolidated Income statement
NOK in million Note 2015 2014
Revenue 5 27,904 24,588 Cost of goods sold -21,501 -18,872 Employee benefits expense 6 -4,593 -3,993 Depreciation and amortisation 11, 12 -409 -346 Other operating costs 7 -884 -794 Acqusition costs -2 -1 Operating profit 514 584 Financial income 407 132 Financial expenses -489 -206 Net financial items 8, 13 -82 -73 Profit before tax 432 511 Tax 9 -39 -82 Profit for the period 393 429
Profit for the period attributable to: Shareholders of Atea ASA 393 429 Profit for the year after shareholder distributions 393 429
Earnings per share - earnings per share 10 3.76 4.14 - diluted earnings per share 10 3.71 4.10 ATEA ASA ANNUAL REPORT 2015 44
Consolidated statement of Comprehensive Income
NOK in million 2015 2014
Profit for the period 393 429 Currency translation differences 221 164 Forward contracts - cash flow hedging -4 -18 Income tax OCI relating to items that may be reclassified to profit or loss 9 -21 -5 Items that may be reclassified subsequently to profit or loss 197 141 Other comprehensive income 197 141 Total comprehensive income for the period 590 570
Total comprehensive income for the period attributable to: Shareholders of Atea ASA 590 570 Profit for the year after shareholder distributions 590 570 ATEA ASA ANNUAL REPORT 2015 45
Oslo, 16 March 2016 Consolidated statement of Financial Position
NOK in million Note 2015 2014 Ib Kunøe Chairman of the Board ASSETS Property, plant and equipment 11 742 613 Deferred tax assets 9 553 546 Goodwill 12 3,815 3,588 Other intangible assets 12 357 369 Morten Jurs Shares in associated companies 13 9 9 Other long-term receivables 15 3 0 Non-current assets 5,479 5,125 Inventories 14 762 632 Sven Madsen Trade receivables 15, 21 5,988 5,496 Other receivables 15, 21 867 777 Other financial assets 5 11 Cash and cash equivalents 19, 21 630 583 Saloume Djoudat Current assets 8,252 7,498 Total assets 13,731 12,624
EQUITY AND LIABILITIES Lisbeth Toftkær Kvan Share capital and premium 16 1,180 1,140 Other unrecognised reserves 1,276 1,079 Retained earnings 1,023 1,330 Equity 3,480 3,549 Marthe Dyrud Interest-bearing long-term liabilities 18, 21 1,182 1,121 Other long-term liabilities 21 5 4 Deferred tax liabilities 9 274 246 Non-current liabilities 1,461 1,371 Truls Berntsen Trade payables 17, 21 5,707 4,681 Interest-bearing current liabilities 18, 21 197 291 Tax payable 122 89 Provisions 20 227 212 Other current liabilities 17, 21 2,514 2,417 Stig Penne Other financial liabilities 21 22 13 Current liabilities 8,790 7,704 Total liabilities 10,252 9,074 Total equity and liabilities 13,731 12,624 Steinar Sønsteby CEO ATEA ASA ANNUAL REPORT 2015 46
Consolidated statement of changes in Equity
Share capital Other unrecognized Retained and premiums 1) reserves earnings Forward contracts- Currency Share Share Other paid-in cash flow translation Option Retained Total NOK in million capital premium capital hedging differences programmes earnings equity
Balance at 1 January 2014 1,031 61 766 8 163 101 1,402 3,533 Other comprehensive income - - - -13 154 - - 141 Profit for the period ------429 429 Issue of share capital 10 38 - - - - - 48 Employee share options, value of employee contributions - - - - - 20 - 20 Dividends ------622 -622 Balance at 31 December 2014 1,041 99 766 -5 318 121 1,209 3,549
Balance at 1 January 2015 1,041 99 766 -5 318 121 1,209 3,549 Other comprehensive income - - - -3 199 - - 197 Profit for the period ------393 393 Issue of share capital 10 35 - - - - - 45 Employee share options, value of employee contributions - - - - - 18 - 18 Dividends ------679 -679 Changes related to own shares -5 ------35 -41 Non-controlling interests from acquistions ------3 -3 Balance at 31 December 2015 1,046 134 766 -7 517 140 884 3,480
1) See Note 16. ATEA ASA ANNUAL REPORT 2015 47
Consolidated statement of Cash Flow
NOK in million Note 2015 2014
Profit before tax 432 511 Taxes paid -56 -39 Depreciation and amortisation 11, 12 409 346 Options 20 20 Gains/losses on the sale of subsidiaries 6 -6 Change in inventories -74 -130 Change in trade receivables -107 -330 Change in trade payables 662 529 Change in other accruals -6 58 Net cash flow from operational activities 1,287 959
Acquisition of subsidiaries/businesses 23 -63 -446 Payments related to acquisitions in previous years -5 -11 Sale of subsidiaries/businesses - - Payments related to sale in previous years - - Purchase of property, plant and equipment and intangible assets 11, 12 -292 -217 Sale of property, plant and equipment and intangible assets 1 21 Net cash flow from investment activities -360 -652
Purchase/sale of treasury shares -41 0 Proceeds from new issues 46 48 Dividend paid -679 -622 Proceeds from raising loans 18 - 753 Repayment of loans -276 -724 Net cash flow from financing activities -950 -546
Net change in cash and cash equivalents for the year -22 -240 Cash and cash equivalents at the start of the year 19 583 746 Foreign exchange effect on cash held in a foreign currency 69 76 Cash and cash equivalents at the end of the year 19 630 583
ATEA ASA ANNUAL REPORT 2015 48
NOTE 1 – GENERAL INFORMATION NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES The Atea Group (“Atea”) is the leading supplier of IT infrastructure solutions in the Nordic and Baltic countries. Atea is present in seven countries – including Norway, Denmark, Sweden, Finland, Lithuania, Latvia and Estonia. 2.0 Basis of the consolidated financial statements The consolidated financial statements of Atea have been prepared in accordance with International Financial The principal activities for the Group’s various business areas are described in more details in Note 5 – Segment Reporting Standards (IFRS), as determined by the EU, and include Atea ASA and subsidiaries in which Atea information. ASA, directly or indirectly, has a controlling interest through ownership interests or agreements. The consolidated financial statements have been prepared under the historical cost basis, and modified by any revaluation of assets Atea ASA is a public limited company that is registered and domiciled in Norway. The office address is and liabilities at fair value through profit or loss according to the policies for the relevant areas. All the figures are Brynsalleen 2, Oslo. Atea ASA is listed on Oslo Stock Exchange and had 7,153 shareholders as of 31 December presented in NOK and rounded to the closest million. Notice is given of any exceptions. 2015, compared with 7,103 shareholders at the start of the year. 2.1 Adoption of new and revised International Financial Reporting Standards (IFRS) These consolidated accounts were approved by the Board of Directors on the 16 March 2016. Changes in accounting policy and disclosures a) New and amended standards adopted by the Group Note that there may be figures and percentages that do not always add up correctly due to rounding differences. No standards adopted by the Group for the first time for the financial year beginning on or after 1 January 2015 have a material impact on the Group.
b) New standards, amendments and interpretations not yet adopted. A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015. The Group has not chosen early adoption of any new or amended IFRS or IFRIC Interpretations. None of these is expected to have significant effect on the consolidated statements of the Group, except the following set out below:
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in OCI, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9’s full impact.
ATEA ASA ANNUAL REPORT 2015 49
IFRS 15, ‘Revenue from Contracts with Customers’ deals with revenue recognition and establishes principles 2.3 Consolidation principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty 2.3.1 Subsidiaries of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when a Subsidiaries are all entities (including structured entities) over which the group has control. The group controls customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and from the good or service. has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. Atea uses the purchase method of accounting to account for the acquisition of subsidiaries. Consideration for The group is assessing the impact of IFRS 15, but so far there are no indications that this standard will have the acquisition of subsidiaries is measured at the fair value of the transferred assets, obligations assumed and material impact on the Group. equity instruments issued. The fair value of any assets or obligations that are contingent on the agreement is also included in the consideration. Identifiable assets and liabilities are recognized at fair value on the acquisition date. IFRS 16, ‘Leases’ significantly changes the accounting principles for many lease contracts, including leased Non-controlling interests in the acquired entity are measured every time at either fair value or the proportionate premises, auto and equipment leases, and subleases. The standard will require lessees to recognize most leases share of the entities acquired net assets. Expenses related to business combinations will be recognized when they on their balance sheets as lease liabilities with corresponding assets. As a consequence, a lessee recognises are incurred. Correspondingly, if there were to be a discrepancy between the estimated fair value based on the depreciation of the right-of-use asset and interest on the lease liability, instead of recognising the expenses as conditional settlement and fair value, and this cannot be attributed to new information on the fair value or more today in Other operating costs. The standard was issued in January 2016 and is effective for annual reports than 12 months passing from the takeover, the difference shall be recognized in the income statement. beginning on or after 1 January 2019, with earlier application permitted. Intercompany transactions, balances and unrealized gains on transactions between Group companies are The Group has conducted an initial assessment of the impact of the new IFRS 16. The assessment is based on eliminated. The accounting principles for subsidiaries are amended as required in order to be consistent with preliminary effects identified so far. The primary impact is in three areas: Atea’s accounting principles.
Leased premises: The nominal value of future lease payments for office and premise contracts is NOK 850 million 2.3.2 Associates as of year-end 2015. Under the new IFRS 16, the net present value of these obligations will be reported as a lease Associates are all entities over which the group has significant influence but not control, generally accompanying liability and as a corresponding right-of-use asset. See Note 11 – Property, plant and equipment for more information. a shareholding of between 20 % and 50 % of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the Auto and equipment leases: Most of Atea’s auto and equipment leases are now reported as operating leases under carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee the current IAS 17 leasing standard. The nominal value of these future lease payments is NOK 179 million as of after the date of acquisition. year-end 2015. Under the new IFRS 16, the net present value of these operating lease obligations will be reported as a lease liability and as a corresponding asset. See Note 11 – Property, plant and equipment for more information. 2.3.3 Comparative figures Comparative figures for previous years are changed in the event of significant changes in accounting principles. Subleases: Existing IFRS does not include specific guidance on the accounting for sublease contracts. Under IFRS 16, these subleases will be reported as a lease liability and corresponding receivable on the balance sheet. If changes are made in classifying and grouping accounting items, the comparative figures are changed accordingly. As of year-end 2015, the Group had a net present value of NOK 356 million in sublease contracts which are not This also applies when presenting discontinued operations on separate lines in the income statement (the reported as assets and liabilities on the balance sheet. These agreements are now reported as commitments to corresponding figures for the balance sheet are not changed). lenders in Note 25 – Commitments. Historical figures are not restated in the event of changes in Group composition or the acquisition of subsidiaries. There are no other IFRSs or IFRIC Interpretations that are not yet effective that would be expected to have a material impact on the Group. 2.4 Segment reporting Atea reports business segments according to geographic business units and shared services business units. 2.2 Critical accounting estimates Group decision makers (CEO/CFO) conduct business planning, control and analysis separately by these business The preparation of accounts in accordance with IFRS requires the use of certain critical accounting estimates. units. A geographical business unit is engaged in providing products and services within a particular geographic In addition, the application of the Atea’s accounting principles requires that the management exercise judgment. area that are subject to risks and returns that are different from other geographical segments. A shared services Areas that contain a high degree of such discretionary assessments, or a high degree of complexity, or areas business unit delivers products and services internally to the geographical business units. Examples of shared where the assumptions and estimates are of significance to the consolidated accounts are described separately. services units are Atea’s group logistics operation in Sweden, and Atea’s group nearshoring operation in Latvia. This applies in particular to the depreciation of property, plant and equipment and intangible assets, valuation of goodwill, valuations associated with acquisitions, valuation of deferred tax assets, and provisions. Changes to A segment is a portion of the business operations that delivers products or services that are subject to a risk and accounting estimates are included in the accounts for the period in which the change occurs. return that are distinct from that of other business areas. In the segment reporting, the internal sales between the various segments are eliminated. ATEA ASA ANNUAL REPORT 2015 50
2.5 Foreign currency translation Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives 2.5.1 Functional and presentation currencies as follows: Items included in the financial statements of each of the Atea Group’s entities are measured primarily using the currency of the primary economic environment in which the entity operates (the functional currency). (i) Buildings, 20-30 years The consolidated financial statements are presented in Norwegian kroner (NOK), which is the functional and (ii) Land, No depreciation presentation currency of Atea ASA. (iii) Vehicles and office machines, 3-5 years (iv) Furniture and fittings, 3-10 years 2.5.2 Transactions and balance sheet items (v) Computer equipment, 3-5 years Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount currencies are recognized in the income statement. If the foreign currency position is considered cash flow hedging, is greater than its estimated recoverable amount. the gains or losses are entered directly in OCI. Repair and maintenance costs are charged to the income statement during the financial period in which they are 2.5.3 Group companies incurred. The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. presentation currency as follows: 2.7.2 Financial leases (i) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that The Group leases certain operating assets. Leases for property, plant and equipment, where most of the risk and balance sheet control rests with the Group are classified as financial leases. At the start of the lease term financial leases are (ii) Income and expenses for each income statement are translated at average exchange rates accounted for in the financial statements as assets and liabilities, equal to the lowest of fair value of the operating (iii) All resulting exchange differences are recognized in OCI and specified as a separate component of equity asset or the present value of the minimum lease payments.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and Each lease payment is allocated between an installment and an interest payment, resulting in an interest cost of borrowings and other currency instruments are entered directly in OCI. When a foreign business is sold, the on the remaining lease liability. Interest costs are accounted for as a financial profit/loss item. Lease liabilities, associated exchange difference is entered directly in OCI through profit and loss as part of the gain or loss on excluding interest costs, are presented as either other current liabilities or other long-term liabilities. Fixed assets the sale. acquired through financial lease agreements are depreciated over the lease’s term or the depreciation period for equivalent assets, whichever is shorter. Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. If a sale and leaseback transaction results in a financial lease, any gain will be postponed and recognized as revenue over the period of the lease. 2.6 Classification Assets are classified as current when intended for sale or consumption in the normal operating cycle, or held 2.7.3 Operating leases primarily for the purpose of being traded, or expected to be realized within twelve months, or classified as cash Leases for which most of the risk rests with the other contracting party, are classified as operating leases. Lease or equivalents. All other assets are classified as non-current. Liabilities are classified as current when expected payments are classified as operating costs and recognized in the income statement during the contract period. to be settled in the normal operating cycle, or held primarily for the purpose of being traded, or due to be settled within twelve months, or there are no unconditional rights to defer settlement for at least twelve months. All other If a sale and leaseback transaction results in an operating lease and it is clearly stated that the transaction has liabilities shall be classified as non-current. been carried out at its fair value, any gain or loss will be recognized in the income statement when the transaction is carried out. If the sales price is less than the fair value, any gain or loss will be recognized in the income statement 2.7 Property, plant and equipment directly at the time of the transaction, apart from in situations when this leads to future lease payments that are 2.7.1 Recognition below the market price. In such cases, the gain/loss is amortized over the lease period. If the sales price is above Property, plant and equipment, are stated at historical cost less depreciation. Historical cost includes expenses the fair value, the excess price is amortized over the asset’s estimated period of use. that are directly attributable to the acquisition of the items. Costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will pass to Atea and the cost of the item can be measured reliably. ATEA ASA ANNUAL REPORT 2015 51
2.8 Intangible assets 2.10.1 Held-to-maturity 2.8.1 Recognition Financial instruments with fixed or determinable cash flows and a fixed maturity that the Group has the positive Intangible assets are recognized on the balance sheet if it can be proven that there are probable future economic intention and ability to hold to maturity are classified as held-to-maturity investments. Financial instruments that benefits that can be attributed to the asset, which is owned by Atea; and the asset’s cost price can be reliably are held to maturity are included in the non-current asset unless the maturity date is less than 12 months after the estimated. balance sheet date. Investments held to maturity are carried at a discounted value (amortized cost). The interest element is disregarded if it is insignificant. Intangible assets are recognized at their cost price. Intangible assets with indefinite useful lives are not amortized, but impairment losses are recognized if the recoverable amount is less than the cost price. 2.10.2 At fair value through profit and loss Financial instruments that are held with the intention of making a gain on short-term fluctuations in prices are 2.8.2 Business combinations and goodwill classified as financial assets at fair value through profit or loss. Financial instruments at fair value through profit Goodwill represents the excess of the cost of acquisition over the fair value of Atea’s share of the net identifiable or loss are classified as current assets, and are carried at fair value at the balance sheet date. Changes in the fair assets of the acquired subsidiary/associate at the time of the acquisition. Goodwill on acquisitions of subsidiaries value are recognized in the income statement and included in the net financial income/expenses. Derivatives are is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. also classified under this group when not part of a hedge according to IAS 39. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is allocated to the relevant cash-generating units for the purpose of impairment testing. Each of those cash-generating 2.10.3 Financial assets available-for-sale units represents the lowest levels for which there are separately identifiable cash flows. Gains and losses on the All other financial instruments, with the exception of loans and receivables originally issued by the company, are sale of business interests include the carrying amount of goodwill relating to the entity sold. classified as available for sale. Financial instruments that are available for sale are presented as current assets if the management has decided to sell the instruments within 12 months of the balance sheet date. Available for sale 2.8.3 Other intangible assets financial instruments are carried at fair value at the balance sheet date. The gain or loss resulting from changes Computer software and rights in the fair value, are recognized directly in OCI until the investment has been disposed of. The accumulated gain Acquired computer software licences are recognized on the balance sheet on the basis of the costs incurred to or loss on financial instruments that has previously been recognized in OCI, will then be reversed, and the gain or acquire and bring to use the specific software. These costs are amortized over their estimated useful lives. Costs loss will be recognized in the income statement. associated with maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software or system solutions controlled by 2.11 Hedging the Group, which will probably generate economic benefits related to the asset that will pass to Atea and can be Before a hedging transaction is carried out, the Group’s finance department assesses whether a derivative measured reliably, are recognized as intangible assets. Computer software costs/solutions and rights recognized (or another financial instrument in the case of a foreign currency hedge) is to be used as: on the balance sheet are amortized over their estimated useful lives, normally 3-7 years. i) a fair value hedge of a recognized asset, liability or a fixed commitment, Contracts and customer relationships ii) a cash flow hedge of a recognized asset or liability, a future transaction identified as very probable or, in the In connection with business combinations, contracts and customer relationships are recorded at fair value on the case of foreign currency risk, a fixed commitment, or opening balance sheet in the Group. The amortization period for contracts and customer relationships is 4-5 years, iii) a net investment hedge in a foreign entity. based on the period they are estimated to generate cash flows. The Group’s criteria for classifying a derivative or other financial instrument as a hedging instrument are as follow: Expenses related to research activities are recognized in the income statement as they are incurred. i) The hedge is expected to be very effective in that it counteracts changes in the fair value of or cash flows from 2.9 Impairment of non-financial assets an identified object – and the efficiency of the hedge is expected to be within the range of 80-125 %, Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. ii) the effectiveness of the hedge can be reliably measured, Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances iii) adequate documentation is established when the hedge is entered into, showing, for example, that the hedge indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which is effective, the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s iv) for cash flow hedges, that the forthcoming transaction must be highly probable; and fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the v) the hedge is evaluated regularly and has proven to be effective. lowest levels for which there are separately identifiable cash flows (cash-generating units). Fair value hedges 2.10 Financial instruments Derivatives designated as hedging instruments are assessed at fair value and changes in fair value are recognized Atea classifies financial instruments in the following categories: in the profit and loss account. Correspondingly, a change in the fair value of the hedged item attributable to the hedged risk is recognized in the profit and loss account. ATEA ASA ANNUAL REPORT 2015 52
Cash flow hedges 2.16 Borrowings The effective components of changes in fair value for a hedging instrument will be recognized in the accounts under Borrowings are recognized at fair value when the loan is disbursed, net of the transaction costs incurred. Transaction OCI. The ineffective part of the hedging instrument is recognized on an ongoing basis in the income statement. costs are charged as an expense over the term of the loan (effective interest rate). Borrowings are classified as When the expected transaction is subsequently accounted for, the associated accumulated gain or loss is reclas- current liabilities unless there exists an unconditional right to defer settlement of the liability for at least 12 months sified either in profit or loss account or the balance sheet item that is hedged. after the balance sheet date.
If the hedged transaction is no longer expected to occur, any previously accumulated gains or losses on the 2.17 Income tax hedging instrument that have previously been recorded directly in OCI will be recognized in the income statement. Income tax consists of the tax payable and changes to deferred tax. Deferred tax is calculated on all taxable temporary differences, with the exception of: 2.12 Inventories Goods purchased for resale are valued at the lower of historical cost or net realizable value. The net realizable (i) Goodwill for which amortization is not deductible for tax purposes. value is the estimated sales price under ordinary operations less the cost of sales. The historical cost is calculated (ii) Temporary differences relating to investments in subsidiaries, associates or joint ventures when the Group by means of the first-in, first-out principle (FIFO). decides when the temporary differences are to be reversed and this is not expected to take place in the foreseeable future. Atea also keeps inventory to cover the spare parts needed in connection with service agreements. The spare parts inventory is recognized at cost price less accumulated, straight-line depreciation over the average duration In the case of recent losses, deferred tax assets are recognized when there is convincing evidence that Atea of the contracts. will have a sufficient profit for tax purposes to utilize the tax assets. On each balance sheet date, Atea reviews its unrecorded and unrecognized tax assets. Atea recognizes deferred tax assets on its balance sheet when the 2.13 Trade receivables conditions for recognition have been met. Correspondingly, Atea will reduce its deferred tax assets if they can Trade receivables, including accrued, uninvoiced income, are recognized at a discounted value. The interest element no longer be utilized. is disregarded if it is insignificant. Provisions for losses are accounted for when there are objective indicators that Atea will not receive settlement in accordance with the original terms and conditions. Deferred tax and deferred tax assets are measured on the basis of the current tax rates and laws applicable to the companies in the Group where temporary differences have arisen. The provisions represent the difference between the nominal and present value of cash flows that are expected to be received. The change in the provisions for the period is accounted for in the income statement. Deferred tax and deferred tax assets are recognized at their nominal value and classified as a non-current asset or a long-term liability on the balance sheet. 2.14 Cash and cash equivalents Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be converted 2.18 Employee benefits into cash within three months and to a known amount, and which contain insignificant risk elements. Bank overdrafts 2.18.1 Pension obligations are shown within borrowings in current liabilities on the balance sheet. Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies. Atea has ended its defined benefit plans in 2013 and have only defined contribution plans 2.15 Share capital and premiums at the year-end 2014 and 2015. Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Costs directly attributable to the issue of new shares related to an For defined contribution plans, Atea pays contributions to publicly or privately administered pension insurance plans acquisition of a business are included in the cost of acquisition as part of the purchase consideration. on a mandatory, contractual or voluntary basis. Atea has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Where any Group company purchases the company’s own shares, the consideration paid, including any directly attributable costs (net of income taxes,) is deducted from equity attributable to Atea’s shareholders until the shares 2.18.2 Share-based compensation are cancelled, reissued or disposed of. Employee options at Atea represent rights for employees to subscribe to shares in the company at a future date at a predetermined subscription price (subscription right). Subscribing normally requires continued employment. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable transaction costs and the related income tax effects, and are included in equity attributable to Atea’s shareholders. The fair value of the employee services received in exchange for the allotment of options is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options allotted. On each balance sheet date, the company revises its estimates of the number of options that are expected to become exercisable. It recognizes the impact of the revision of original estimates, if any, in the ATEA ASA ANNUAL REPORT 2015 53
income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds 2.21 Revenue recognition received net of any directly attributable transaction costs are credited to share capital and share premium when Revenue comprises the fair value for the sale of goods and services, net of value-added tax, rebates and discounts. the options are exercised. Intercompany sales are eliminated. Revenues are not recognized unless the customer has accepted the deliverance and collectability of the related receivables is reasonably assured. Revenue is recognized as follows for Atea’s 2.18.3 Termination benefits different types of revenues: Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Atea recognizes termination benefits 2.21.1 Products when it is demonstrably committed to either: terminating the employment of current employees according to a Sales of goods are recognized when Atea has delivered products to the customer. Products delivered directly detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made from the distributor to the customer are at Atea’s own risk and expense, and therefore presented as gross sales to encourage voluntary redundancy. in the income statement.
2.18.4 Bonus plans 2.21.2 Consulting services Atea recognizes a provision where contractually obliged or where there is a past practice that has created a Consulting services billed on an hourly basis are recognized as income when Atea has delivered the services to constructive obligation. the customer.
2.19 Provisions 2.21.3 Fixed price projects Provisions are recognized when Atea has a valid liability (legal or constructive) as a result of events that have taken Fixed price projects include both fixed price consulting projects and combined consulting and product deliveries. place and it can be proven probable (more probable than not) that a financial settlement will take place as a result Project revenue and costs related to earned revenue are recognized according to the stage of completion of the of this liability, and that the size of the amount can be measured reliably. Provisions are reviewed on each balance project. The stage of completion is determined based on the accrued cost related to services delivered compared sheet date and their level reflects the best estimate of the liability. When the effect of time is insignificant, the to total estimated cost for the project. Earned revenue for the period is earned revenue at the balance sheet provisions will be equal to the size of the expense necessary to be free of the liability. When the effect of time is date, less earned revenue in prior periods. Costs related to earned revenue are total estimated costs multiplied significant, the provisions will be the present value of future payments to cover the liability. by the degree of completion. Costs related to earned revenue for the period are increases in the amount from prior periods. Any expected total project costs that exceed the total project revenue are recognized as a liability Restructuring provisions only include direct expenses linked to the actual restructuring that is necessary and in the period they are identified. which is not part of the day-to-day operations. Restructuring provisions are recognized when the company has a detailed restructuring plan in which the business area is identified; the premises and type of departments that will 2.21.4 Service contracts be affected, the number of employees who will be compensated for dismissal, the type of expenses that will be Service contracts include time-limited service & support and outsourcing contracts, or contracts running until incurred and when the restructuring is to begin have been clarified; and the restructuring plan has been commenced termination by either party. Service revenues are recognized in the accounting period in which the services are or communicated to those who will be affected by it. Provisions are not recognized for future operating losses. rendered, and such revenues are normally allocated linearly over the length of the contracts. Costs related to earned service revenues are recognized according to the stage of completion. The stage of completion represents 2.20 Contingent liabilities and assets recognized revenues compared to total revenues for the contract. Contingent liabilities are defined as:
(i) Possible obligations resulting from past events whose existence depend on future events (ii) Obligations that are not recognized because it is not probable that they will lead to an outflow of resources (iii) Obligations that cannot be measured with sufficient reliability
Contingent liabilities are not recognized in the annual financial statements. Significant contingent liabilities are stated, with the exception of contingent liabilities where the probability of the liability occurring is remote. A contingent asset is not recognized in the annual financial statements, but is stated if there is a certain level of probability that a benefit will accrue to Atea.
For contingent consideration recognized as a liability in connection with the acquisition of business, see Note 23. ATEA ASA ANNUAL REPORT 2015 54
NOTE 3 – FINANCIAL RISK AND CAPITAL MANAGEMENT
3.1 Financial risk factors The Group’s activities cause different financial risks: market risk (including currency risk, fair value interest rate 3.1.1 Foreign exchange risk risk and price risk), credit risk, liquidity risk and floating interest rate risk. The group’s overall risk management The Group operates internationally and is exposed to foreign exchange risk in multiple foreign currencies. This risk plan focuses on the unpredictability of the capital markets and attempts to minimise the potential negative effects is particularly relevant with respect to the Swedish crown (SEK), Danish crown (DKK), Euro (EUR), and US dollar on the group’s financial results. The Group uses derivative financial instruments to hedge certain risk exposures. (USD). Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Risk management is carried out by Corporate Staff (Group Treasury) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s To manage their foreign exchange risk arising from future commercial transactions and recognised assets and operating units. The Board of Directors provides principles for overall risk management, as well as policies covering liabilities, entities in the Group use forward contracts. Foreign exchange risk arises when future commercial trans- specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments, actions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. and the investment of excess liquidity.
The table below illustrates the outstanding forward currency contracts as of 31 December 2015 and 31 December 2014. 2015 2014 Average Contract Contract Fair Average Contract Contract Fair Forward currency contracts exchange rate value value value exchange rate value value value Local currency NOK in NOK in Local currency NOK in NOK in NOK million million million NOK million million million Sell currency NOK Less than 3 months 1.0286 109 112 3 1.0240 93 95 2 3 to 6 months 1.0066 7 7 0 1.0049 5 5 0 Buy currency SEK Less than 3 months 1.0333 250 258 3 Buy currency DKK Less than 3 months 1.2831 700 898 4 1.1385 600 683 46 Sell currency DKK Less than 3 months 1.3015 40 52 0 1.2010 60 72 -1 3 to 6 months 1.2863 3 3 -0 1.2284 2 2 0 Buy currency EUR Less than 3 months 9.7099 7 67 -1 8.9924 9 80 -0 3 to 6 months 9.0341 0 1 -0 Sell currency EUR Less than 3 months 9.6887 1 14 0 9.0264 3 25 0 Buy currency USD 1) Less than 3 months 8.8408 57 504 -2 6.9831 59 410 28 3 to 6 months 8.9453 17 153 -1 7. 3113 9 66 1 Sell currency USD Less than 3 months 8.8599 9 81 0 7.1945 17 125 -1
1) At the end of 2015 Atea (Atea ASA) additionally had a forward contract, which is not specified in above table, buying USD 20 million and selling EUR 18 million, in less than three months, at the exchange rate of 1.0936 with an estimated fair value of NOK 1 million ATEA ASA ANNUAL REPORT 2015 55
The company has investments in foreign subsidiaries, whose net assets are exposed to foreign currency translation risk. 3.2 Accounting for derivative financial instruments and hedging activities The Group hedge accounts the fair value of financial instruments for cases where the requirements in accordance 3.1.2 Credit risk with IAS 39 are satisfied. Change in carrying amount of financial contracts that are temporarily entered under other Atea has for years had modest losses on trade debtors. New customers must be approved before they are granted comprehensive income totals NOK -4 million as of 31 December 2015 (NOK -18 million in 2014). Change in fair credit. The responsibility for granting credit is decentralised to each operating unit. Credit insurance is used only value of other financial instruments is entered immediately in the income statement. For all financial instruments to a small extent. The Group has no significant concentrations of credit risk, since the customer base is large the carrying amount is equal to the fair value. The nominal value less impairment provision of trade receivables and unrelated. Derivative counterparties and bank deposits are limited to high-credit-quality financial institutions. and payables are assumed to correspond to their fair values.
3.1.3 Liquidity risk 3.3 Capital management Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability The Group manages its capital to secure the ongoing operations of the companies in the Group and to maximise of funding through an adequate amount of committed credit facilities and the ability to close out market positions. the shareholders’ return. This is accomplished through a healthy balance between liabilities, equity and earnings. Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available. Atea assesses its operational gearing (net interest-bearing liabilities/operating profit before depreciation) and the Group’s equity ratio on an ongoing basis. 3.1.4 Cash flow and floating interest rate risk As of 31 December 2015 the Group had a net financial position of NOK -750 million (NOK -829 million in 2014). The Group’s target is to have an equity ratio of 20 % or more and maximum operational gearing of 2.5. At the end The interest rates on deposits and loans have a term of less than 12 months. As the Group has no significant of 2015 the Group had an equity ratio of 25.3 % (28.1 % in 2014) and operational gearing of 0.8 (0.8 in 2014). interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from borrowings. Borrowings issued at floating rate 3.4 Sensitivity analysis of interest expose the Group’s cash flow to interest rate risk. Part of the long term financing has fixed interest The Group has identified market risk (foreign exchange risk, primarily with respect to SEK, DKK, EUR, LTL and rate for the whole period. USD) and floating interest rate risk as the two most important risk factors it is exposed to. The tables below illustrate how fluctuations in these two risks will affect the Group’s earnings and equity after tax. ATEA ASA ANNUAL REPORT 2015 56
Sensitivity analysis 2015: Interest rate risk Foreign currency risk + 200 bp 1) - 200 bp 1) + 10 % - 10 % Effect on Other effects Effect on Other effects Effect on Other effects Effect on Other effects NOK in million Amount profit/loss on equity profit/loss on equity Amount profit/loss on equity profit/loss on equity
Financial assets 2) -NOK 848 17 - -17 - 118 12 - -12 - -SEK -9 -0 - 0 - 781 0 78 -0 -78 -DKK -45 -1 - 1 - 195 -6 26 6 -26 -EUR 48 1 - -1 - 219 22 - -22 - -USD -211 -4 - 4 - 365 37 - -37 - Effect on financial assets before tax 13 - -13 - 64 104 -64 -104
Tax expense (27 %) -3 - 3 - -17 -28 17 28 Effect on financial assets after tax 9 - -9 - 47 76 -47 -76
Financial liability items 3) -NOK 533 -11 - 11 ------SEK -127 3 - -3 ------DKK 934 -19 - 19 ------EUR 39 -1 - 1 ------Effect on financial assets before tax -28 - 28 - - - - -
Tax expense (27 %) 7 - -7 - - - - - Effect on financial assets after tax -20 - 20 - - - - - Total increase/reduction -11 - 11 - 47 76 -47 -76
1) Basis points. 2) Consists of cash and cash equivalents, loans and derivative contracts (forward currency contracts). 3) Consists of liabilities. ATEA ASA ANNUAL REPORT 2015 57
Sensitivity analysis 2014: Interest rate risk Foreign currency risk + 200 bp 1) - 200 bp 1) + 10 % - 10 % Effect on Other effects Effect on Other effects Effect on Other effects Effect on Other effects NOK in million Amount profit/loss on equity profit/loss on equity Amount profit/loss on equity profit/loss on equity
Financial assets 2) -NOK 487 10 - -10 - -116 -12 - 12 - -SEK -57 -1 - 1 - 723 1 71 -1 -71 -DKK 112 2 - -2 - 161 -8 24 8 -24 -EUR 110 2 - -2 - 60 6 - -6 - -USD -73 -2 - 2 - 278 28 - -28 - -LTL 4 0 - -0 ------Effect on financial assets before tax 12 - -12 - 15 96 -15 -96
Tax expense (27 %) -3 - 3 - -4 -27 4 27 Effect on financial assets after tax 8 - -8 - 11 69 -11 -69
Financial liability items 3) -NOK 576 -12 - 12 ------SEK -73 2 - -2 ------DKK 877 -18 - 18 ------EUR 2 -0 - 0 ------LTL 31 -1 - 1 ------Effect on financial assets before tax -28 - 28 - - - - -
Tax expense (27 %) 8 - -8 - - - - - Effect on financial assets after tax -20 - 20 - - - - - Total increase/reduction -12 - 12 - 11 69 -11 -69
1) Basis points. 2) Consists of cash and cash equivalents, loans and derivative contracts (forward currency contracts). 3) Consists of liabilities. ATEA ASA ANNUAL REPORT 2015 58
NOTE 4 – CRITICAL ESTIMATES AND JUDGMENTS IN Revenue recognition APPLYING THE ENTITY’S ACCOUNTING POLICY The Group uses the percentage-of-completion method in accounting for fixed-price projects and service contracts. Use of the percentage-of-completion method requires the Group to estimate the services performed to date as a proportion of the total services to be performed. When applying the entity’s accounting policies the management makes judgements that have significant effects on the amounts recognized in the financial statements. Estimates and judgements are continually evaluated and Trade receivables are based on historical experience and other factors, including expectations of future events that are believed to There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of be reasonable under the circumstances. Actual results can differ from estimates. customers spread across several countries.
The main estimates and assumptions that have a significant risk of causing a material adjustment to the carrying Accounting provisions amounts of assets and liabilities within the next financial year are specified below. Important and critical judgements In connection with accounting provisions, the Group uses estimates for (1) how probable settlement of the obligation in applying the entity’s accounting policies are also specified. is and (2) the size of the provisions to reflect Atea’s risk arising from the transaction.
Impairment of goodwill/intangible assets and other fixed assets The most important estimates and assumptions that have a significant risk of causing a material adjustment to the NOTE 5 – SEGMENT INFORMATION carrying amounts of assets and liabilities within the next financial year are related to impairment assessment of goodwill and other fixed assets. The book value of goodwill as of 31 December 2015 is NOK 3,815 million, other intangible assets is NOK 357 million, and property, plant and equipment is NOK 742 million. The management has Atea is located in 89 cities in Norway, Sweden, Denmark, Finland, and the Baltic countries of Lithuania, Latvia and used best estimates when determining the depreciation period for intangible assets and other depreciable assets. Estonia, with approximately 6,800 employees. For management and reporting purposes, the Group is organized within these geographical areas. The performance of these geographical areas are evaluated on a regular basis Goodwill has an indefinite useful life and is tested annually for impairment. Assets that are subject to amortization by Atea’s Senior Management Group. are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The assessment of impairment for 2015 indicates that even with the use of conservative In addition to the geographical areas, the Group operates Shared Services functions (Atea Logistics and Atea Global estimates with regard to future cash flows and discount rates, the book value of any of the assets will not exceed Services) and central administration. These costs are reported separately as Group Shared Service and Group cost. the recoverable amounts. Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with Recoverable amounts of cash-generating units are determined based on judgements of fair values less costs to third parties. sell or value-in-use estimates.
Deferred tax The recognition of deferred tax assets and liabilities requires that judgement being exercised. Atea recognizes deferred tax assets on its balance sheet when it has been deemed adequately probable that the operations in the individual country will generate a taxable profit that the tax loss carry forward can be used to offset. Taking into account the historical losses and cyclical nature, future earnings are not deemed probable until the individual company has actually reported a taxable profit for a period. In calculating the tax asset that is to be recognised, the expected profit is only taken into account for a limited future period. This period has been defined as 5 years for 2015. At the end of 2015 deferred tax assets of NOK 553 million (NOK 546 million for 2014) were recognised. NOK 515 million of the deferred tax assets is related to tax loss carry forward. ATEA ASA ANNUAL REPORT 2015 59
2015: Shared Group cost / NOK in million Norway Sweden Denmark Finland The Baltics services eliminations Total
Revenue 7,268 10,304 7,671 1,852 942 4,436 -4,569 27,904 Cost of goods sold and operating expenses -7,078 -9,971 -7,309 -1,834 -894 -4,414 4,519 -26,979 Depreciation and amortisation -65 -65 -215 -11 -39 -14 -1 -409 Operating profit 125 269 147 8 8 8 -50 514 Net financial items -82 Profit before tax 432
Number of full-time employees at 31 December 1,657 2,002 1,557 315 706 533 9 6,779
2014: Shared Group cost / NOK in million Norway Sweden Denmark Finland The Baltics services eliminations Total
Operating revenue 6,806 8,893 6,504 1,707 792 4,267 -4,381 24,588 Cost of goods sold and operating expenses -6,535 -8,638 -6,143 -1,680 -760 -4,229 4,327 -23,659 Depreciation and amortization -67 -64 -168 -12 -24 -9 -0 -346 Operating profit 204 190 193 15 7 29 -54 584 Net financial items -73 Profit before tax 511
Number of full-time employees at 31 December 1,637 1,870 1,537 326 563 559 12 6,504
2015: Shared Group cost / NOK in million Norway Sweden Denmark Finland The Baltics services eliminations Total Assets 4,616 3,448 4,556 211 343 1,032 -475 13,731 Liabilities 3,334 3,703 4,024 425 293 871 -2,398 10,252 Investments to PPE and Intangible assets 84 65 232 14 40 12 - 447
2014: Shared Group cost / NOK in million Norway Sweden Denmark Finland The Baltics services eliminations Total Assets 3,413 2,983 3,975 199 280 873 902 12,624 Liabilities 2,383 3,238 3,445 422 250 729 -1,393 9,074 Investments to PPE and Intangible assets 84 31 211 8 24 15 2 375 ATEA ASA ANNUAL REPORT 2015 60
Operating revenues by category: Chief Financial Officer During 2015, Robert Giori received a salary of NOK 1,970,000 (NOK 875,000 from August to December in 2014), NOK in million 2015 2014 a performance-based bonus of NOK 397,000, (NOK 139,000 in 2014), as well as an installment on sign-on bonus of NOK 300,000 (NOK 300,000 in 2014). The value of payments in kind was NOK 10,000 (NOK 4,000 Product revenue 22,251 19,576 in 2014). Benefits related to pension plan totalled NOK 39,000 (NOK 11,000 in 2014). Upon the termination of his employment he is under certain circumstances entitled to additional 3 months of salary beyond his period of Services revenue 5,652 5,012 notice of 3 months. Other income 0 1 Total revenue 27,904 24,588 Senior Vice President of Atea ASA During 2015, Tommy Ødegaard received a salary of NOK 650,000 The value of payments in kind was NOK 21,000. Benefits related to pension plan totalled NOK 13,000. Upon the termination of his employment he is under certain NOTE 6 – EMPLOYEE BENEFIT EXPENSE circumstances entitled to additional 3 months of salary beyond his period of notice of 3 months. Tommy Ødegaard AND REMUNERATION started in his position in September 2015. Managing Director of Atea AS (Norway) NOK in million 2015 2014 In 2015, Dag Fodstad received a salary of NOK 2,024,000 (NOK 1,818,000 in 2015). Benefits related to pension plans totalled NOK 39,000 (NOK 29,000 in 2014). Dag Fodstad ended his employment in Atea in 2015. Wages and salaries to employees 3,455 2,997 Total social security costs 576 522 Managing Director of Atea AB (Sweden) Option plans for the management and employees 25 28 In 2015, Carl-Johan Hultenheim received a salary of SEK 2,400,000 (SEK 2,100,000 in 2014), a performance- based bonus of SEK 1,000,000, and an option gain of SEK 2,469,000, (SEK 1,245,000 in 2014).In 2015 the Pension costs 262 222 value of payments in kind was SEK 97,000 (SEK 91,000 in 2014). Benefits related to pension plans totalled SEK Other personnel costs 274 224 499,000 (SEK 426,000 in 2014). Upon the termination of his employment he is under certain circumstances Total employee compensation and benefit expenses 4,593 3,993 entitled to an additional 12 months of salary beyond his period of notice of 12 months.
Average number of full time employees 6,716 6,204 Managing Director of Atea A/S (Denmark) In 2015, Morten Felding received a salary of DKK 2,000,000 (DKK 1,333,000 from May to December in 2014), a performance-based bonus of DKK 619,000, (DKK 315,000 in 2014), and an option gain of DKK 2,166,000. Remuneration of key group employees The value of payments in kind was DKK 165,000. Benefits related to pension plan totalled DKK 148,000. Morten Key group employees are defined here as the managers that report directly to the CEO and are part of the group Felding is not entitled to any special compensation upon the termination of his employment beyond his period of management. No loans, advances or guarantees have been granted to key group employees or board members. notice of 12 months. Shares and options owned by key employees are described in Note 16. Managing Director of Atea Finland Oy CEO of Atea ASA In 2015, Juha Sihvonen received a salary of EUR 217,000 (EUR 225,000 in 2014), as well as a performance-based In 2015 ,Steinar Sønsteby received a salary of NOK 3,628,000 (NOK 3,447,000 in 2014), as well as a performance- bonus of EUR 121,000.The value of payments in kind for 2015 was EUR 22,000 (EUR 25,000 in 2014). Benefits based bonus of NOK 4,768,000, (NOK 1,640,000 in 2014). The value of payments in kind was NOK 196,000 related to a defined contribution pension plan totalled EUR 11,000 (EUR 10,000 in 2014). Upon the termination (NOK 260,000 in 2014). Benefits related to pension plans totalled NOK 40,000 (29,000 in 2014). Upon the of his employment he is under certain circumstances entitled to an additional 12 months of salary beyond his termination of his employment he is under certain circumstances entitled to an additional 6 months of salary period of notice of 6 months. beyond his period of notice of 6 months. Managing Director of Atea Baltic UAB In 2015, Arunas Bartusevicius received a salary of EUR 57,000 (EUR 61,000 in 2014), and an option gain of EUR 165,000. The value of payments in kind was EUR 7,000 (EUR 8,000 in 2014). Arunas Bartusevicius is not entitled to any special compensation upon the termination of his employment beyond his period of notice of 3 months. ATEA ASA ANNUAL REPORT 2015 61
The Board of Director's declaration and guidelines in accordance with Section 6-16a of the Public Limited Guidelines for salaries and other remuneration to the executive management in the coming financial year Liability Companies Act a) Fixed salary and cash bonus Pursuant to Section 5-6 of the Public Limited Liability Companies Act, the General Meeting shall consider the Remuneration to the executive management team consists of a fixed salary and performance-based compensation. Board of Directors' declaration regarding salaries and remuneration to the executive management. This performance-based compensation has two forms. First, performance-based compensation consists of a cash bonus which is determined by the business results of the organization under the executive’s management. This cash The General Meeting shall conduct a vote on the Board of Director’s proposal for guidelines for salaries and bonus is based on the organization’s operating profit relative to a target. The target is approved by the Board of remuneration to the executive management. The vote of the General Meeting is consultative to the Board, with the Directors following an evaluation of market conditions, and the cash bonus is subject to an individual absolute limit. exception of benefits mentioned in Section 6-16a, first paragraph, item 3 of the Public Limited Liability Companies Act (including grant of share options). For these benefits, the vote is binding for the Board of Directors. b) Stock options Secondly, performance based compensation is granted by stock options to the executive team, as well the mana- The Board of Directors has given the following declaration: gement teams of each country and other key employees. The stock option grants provide additional incentives toward creating long-term shareholder value. As a general rule, the stock option grants vest over a period of three Summary of executive compensation policies years, with one-third of the options vesting after each year. The maximum number of options vesting in any given The main principle in the Company’s policy for executive compensation is that the executive team shall be offered year will not exceed three percent of the shares outstanding in the company (in 2015, this was 1.4 percent). competitive salary terms, with performance-based compensation tied to business results and shareholder value, in order to achieve the desired competence and incentives within the executive management team. The strike price of the options will be set at the market price at the time of grant. The strike price will be adjusted for any dividends paid before exercise. The stock option grants have a cap of 3 times the market price at the date The Company has a separate Compensation Committee that provides the Board of Directors with recommendations of grant. If the share price exceeds the cap price, the options may be settled by the company in cash based on the regarding salary and other benefits to the company’s executive management. Based on the input of the Compen- gain calculated at the cap price. Consequently, the option program is subject to an absolute limit. sation Committee, Guidelines for executive compensation are established by the Board for the coming year, and presented to the General Meeting. According to these guidelines, the salary and other remuneration payable to c) Pension, benefits in kind and severance pay the President and CEO is determined by the Board of Directors, while compensation payable to other members Finally, members of the executive management team participate in the pension scheme of the local subsidiary in of the executive management is determined by the CEO in consultation with the Board Chairman. which they are employed. In addition, members of the executive management may receive certain limited benefits in kind, including a company car, telephone/internet access, and subscription to journals/newspapers. The terms This policy for determining executive compensation was valid during 2015 and remains valid for the coming of employment for the executive management vary with regard to their entitlement to severance or termination financial year. A more detailed description of the executive compensation paid in 2015 is provided in Note 6 in payments. The terms of employment for the executive management vary with regard to their entitlement to severance the Group’s annual accounts. payments. Details regarding individual severance terms are available in Note 6 of the Group financial statements.
The Board of Directors is of the opinion that compensation agreements that were entered into or amended in accordance with the description above in the previous financial year have had a positive impact on the company and its shareholders. This is based on the fact that the company has been able to attract and retain the human resources that are required to fulfil the company's objectives. ATEA ASA ANNUAL REPORT 2015 62
NOTE 7 – OTHER OPERATING EXPENSES NOTE 8 – NET FINANCIAL ITEMS
NOK in million 2015 2014 NOK in million 2015 2014 Car and travel costs 236 214 Communication and IT costs 217 184 Interest income 1) 43 49 Premises costs 265 242 Other financial income 364 83 Marketing costs 83 79 Total financial income 407 132 Bad debts 6 4 Other costs 1), 2) 77 72 Interest costs on loans 1) -84 -91 Total other operating expenses 884 794 Interest costs on financial leases 1) -15 -15 Other financial expenses -392 -100 Total financial expenses -489 -206 1) Audit fees Total net financial items -82 -73 The table below shows Deloitte’s total charges for auditing and other services. All amounts are exclusive of VAT.
NOK in million 2015 2014 Foreign exchange effects recognised as an expense/income in the income statement as follows:
Auditor's fees 7 6 NOK in million 2015 2014 Assurance services 1 1 Tax advisory services 0 0 Included in operating profit/loss 2) 5 -3 Other non-audit services 2 2 Included in net financial income 2) 362 83 Total 10 9 Included in net financial expenses 2) -385 -95 Total -18 -16
2) Remuneration to the Board of Directors of Atea ASA 1) Interest paid in 2015 totals NOK 98 million (NOK 106 million in 2014). NOK 1 million was paid in fees to the Board of Directors of Atea ASA in 2015 (NOK 1 million in 2014). Fees to Interest received in 2015 totals NOK 43 million (NOK 49 million in 2014). the Chairman of the Board amounted to NOK 300,000, fees to the employee representatives amounted to NOK 2) Foreign exchange effects are related to short-term assets and liability items. 100,000 each and the rest of the Board of Directors received a fee of NOK 150,000 each.
NOK 300,000 was paid in fees to the Audit Committee of Atea ASA in 2015,or NOK 100,000 to each of the members. This is the same as in 2014. ATEA ASA ANNUAL REPORT 2015 63
NOTE 9 – TAXES
Income tax recognized in profit or loss: Income tax recognised in other comprehensive income
NOK in million 2015 2014 NOK in million 2015 2014
Current tax Current tax - - Norway - - Deferred taxes Other countries 66 80 Relating to currency effect on equity loans 21 5 Total income tax expenses recognized in other comprehensive income 21 5 Deferred taxes Origination and reversal of temporary differences -31 7 Income tax recognised directly in equity Net losses utilized 88 54 Change in deferred tax assets due to tax losses previously unrecognized -84 -60 NOK in million 2015 2014 Total income tax expenses 39 82 Current tax - - The income tax expense for the year can be reconciled to the accounting profit as follows: Deferred taxes Relating to forward contracts 6 - NOK in million 2015 2014 Total income tax expenses recognized directly in equity 6 -
Profit before tax 432 511 Deferred tax balances are presented in the statement of financial position as follows: Income tax expense calculated at 27 % 2) 117 138 Effect of income non taxable and expenses non deductible 3) 4 22 NOK in million 31 Dec 2015 31 Dec 2014 Effect of previously unrecognized and unused tax losses and deductable temporary differences now recognized as deferred tax assets -78 -60 Deferred tax assets related to carryforward losses 1) 515 518 Effect of different tax rates of subsidiaries operating in other jurisdictions 4) -16 -15 Deferred tax assets related to temporary differences 1) 38 29 Effect of deferred tax balances due to the change in income tax rates 4) 39 -1 Deferred tax liabilities -274 -246 Effect of deferred tax changes recognised in other comprehensive Net deferred tax assets 279 300 income or directly to equity -27 -5 Total 39 80
Adjustments recognised in the current year in relation to the current tax of prior years 0 2 Income tax expense recognised in profit or loss 39 82
Effective tax rate 9.1% 16.0% ATEA ASA ANNUAL REPORT 2015 64
Deferred tax assets (liabilities) 2015 Recognized in Business Currency Book value Recognized other compr. Recognized combin./ translation Book value NOK in million at 1 Jan 2015 in P/L income in equity disposals differences Other at 31 Dec 2015
Temporary differences Property, plant and equipment -4 -12 - - - -1 - -18 Intangible assets 5) -207 17 - - -3 -16 - -210 Inventories 8 2 - - - 0 - 10 Trade and other receivables 3 -7 - - -0 1 - -3 Provisions and accruals 3 8 - - - -1 - 10 Capital gain/loss accounts -30 -16 - - - -3 - -49 Financial leases 23 1 - - - 1 - 25 Other financial liabilities -11 36 -21 -6 - -0 0 -2 Other differences -3 2 - - - 0 - -0 Total -218 31 -21 -6 -3 -18 0 -236
Unused tax losses and credits Tax loss carryforward 671 -88 - - - 1 - 584 Deferred tax assets not recognized on statement of financial position -153 84 ------69 Deferred tax assets recognized on the statement of financial position 518 -4 - - - 1 - 515
Net deferred tax assets recognized on the statement of financial position 300 27 -21 -6 -3 -17 0 279 ATEA ASA ANNUAL REPORT 2015 65
Deferred tax assets (liabilities) 2014 Recognized in Business Currency Book value Recognized other compr. Recognized combin./ translation Book value NOK in million at 1 Jan 2014 in P/L income in equity disposals differences Other at 31 Dec 2014
Temporary differences Property, plant and equipment -13 10 - - -0 -1 - -4 Intangible assets 5) -189 13 - - -20 -11 - -207 Inventories 11 -3 - - 0 0 - 8 Trade and other receivables -6 9 - - 0 -1 - 3 Provisions and accruals 20 -17 - - - 0 - 3 Capital gain/loss accounts -20 -11 - - - 0 - -30 Financial leases 15 7 - - - 1 - 23 Other financial liabilities 1 -7 -5 - 0 0 - -11 Other differences -2 -0 - - - -0 -1 -3 Total -183 2 -5 - -20 -11 -1 -218
Unused tax losses and credits Tax loss carryforward 733 -63 - - - 1 - 671 Deferred tax assets not recognized on statement of financial position -213 60 - - - - -153 Deferred tax assets recognized on the statement of financial position 520 -4 - - - 1 - 518
Net deferred tax assets recognized on the statement of financial position 337 -2 -5 - -20 -10 -1 300 ATEA ASA ANNUAL REPORT 2015 66
The Group's tax losses expires as follows: NOTE 10 – EARNINGS PER SHARE
2019 No expiration Basic NOK in million 2016 2017 2018 and later deadline Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year. Norway - - - - 2,267 Sweden - - - - 6 Denmark - - - - 5 NOK in million 2015 2014 Finland - 12 16 34 - The Baltics - - - - 16 Profit from continued operations, less non-controlling interests 393 429 Total - 12 16 34 2,293 Group's profit for the year 393 429
1) Atea recognises deferred tax assets on the statement of financial position when it has been deemed adequately probable Weighted average number of outstanding shares (in million) 105 104 that the operations in the indvidual country will generate a taxable profit that the tax loss carry forward can be used to offset. Taking into account the historical losses and cyclical nature, future earnings are not deemed probable until the individual company has actually reported a taxable profit for a period of time. When calculating tax assets that are Basic earnings per share for continued operations (NOK) 3.76 4.14 not to be recognised, the expected profit is only taken into account for a limited future period (normally limited to a maximum period of 5 years). 2) The tax rate used for the 2015 and 2014 reconciliations above is the corporate tax rate of 27% payable by corporate entities in Norway on taxable profits under the tax law in that jurisdiction Diluted 3) Non taxable income and non deductible expenses pursuant to the countries income tax laws. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding 4) Nominal tax rates in 2015 by country: Norway - 27% (25% from 1 January 2016) , Sweden - 22%, Finland - 20%, to assume conversion of all dilutive potential ordinary shares. The Company’s dilutive potential ordinary shares are Denmark - 23.5% (22% from 1 January 2016), The Baltic - 0-15%. share options issued. A calculation is done to determine the number of shares that could have been acquired at Nominal tax rates in 2014 by country: Norway - 27% , Sweden - 22%, Finland - 20%, Denmark - 24.5%. 5) Primarily related to depreciable excess values from business combinations. fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
NOK in million 2015 2014
Profit from continued operations, less non-controlling interests 393 429 Group's profit for the year 393 429
Weighted average number of outstanding shares (in million) 106 105
Diluted earnings per share for continued operations (NOK) 3.71 4.10 ATEA ASA ANNUAL REPORT 2015 67
NOTE 11 – PROPERTY, PLANT AND EQUIPMENT
Buildings and Vehicles and Furniture Computer NOK in million property Land office machines and fittings equipment Total
Acquisition cost Accumulated value at 1 January 2014 67 16 91 242 945 1,362 Changes from prior years - - - - 0 0 Additions Ordinary additions 18 - 21 7 223 269 Business combinations (See Note 23) 0 - 7 1 32 40 Disposals 1) - - -3 -1 -11 -16 Currency translation effects 4 1 7 6 46 65 Accumulated value at 31 December 2014 90 18 123 255 1,234 1,719 Changes from prior years 0 - -3 -3 5 0 Additions Ordinary additions 2 - 17 20 292 331 Business combinations (See Note 23) 12 - 2 0 20 34 Disposals 1) - - -7 -8 -26 -41 Currency translation effects 5 1 7 17 64 95 Accumulated value at 31 December 2015 109 19 140 280 1,591 2,139
1) Gain/loss on the disposal of property, plant and equipment accounted for insignificant amounts in 2014 and 2015. ATEA ASA ANNUAL REPORT 2015 68
Buildings and Vehicles and Furniture Computer NOK in million property Land office machines and fittings equipment Total
Accumulated depreciation and write-downs Accumulated value at 1 January 2014 -21 - -76 -147 -597 -841 Changes from prior years - - -0 - -0 -0 Depreciation -2 - -8 -19 -177 -206 Business combinations (See Note 23) - - -4 -1 -12 -17 Disposals 1) - - 2 1 6 9 Currency translation effects -0 - -6 -4 -41 -52 Accumulated value at 31 December 2014 -23 - -92 -170 -821 -1,106 Changes from prior years -0 - -5 1 5 0 Depreciation -3 - -6 -22 -220 -252 Business combinations (See Note 23) ------Disposals 1) - - 4 8 25 36 Currency translation effects -1 - -9 -13 -53 -75 Accumulated value at 31 December 2015 -28 - -109 -197 -1,064 -1,397
Accumulated value at 1 January 2014 - - - -0 -0 -1 Write-downs - - - 0 0 1 Accumulated value at 31 December 2014 - - - -0 -0 -0 Write-downs -0 - - - - -0 Accumulated value at 31 December 2015 -0 - - -0 -0 -0
Acquisition cost 90 18 123 255 1,234 1,719 Accumulated depreciation and write downs -23 - -92 -170 -821 -1,106 Accumulated value at 31 December 2014 66 18 31 84 414 613
Acquisition cost 109 19 140 280 1,591 2,139 Accumulated depreciation and write downs -28 - -109 -197 -1,064 -1,397 Accumulated value at 31 December 2015 82 19 31 84 527 742
1) Gain/loss on the disposal of property, plant and equipment accounted for insignificant amounts in 2014 and 2015. ATEA ASA ANNUAL REPORT 2015 69
Financial leases: Operating leases: Computer equipment acquired through financial leases, where all the risk and control rests essentially with the The future minimum lease payments under non-cancellable operating leases are as follows: Group, includes the following: Maturity NOK in million 2015 2014 Maturity after more 2015 within 1 year 1-5 years than 5 years
Recognised historical cost of financial leases 684 529 Payment for leased premises (gross) 166 576 87 Accumulated depreciation -402 -278 Subleasing of premises 2 2 18 Book value at 31 December 282 251 Net payments after deduction of subleasing 167 578 104
Vehicles acquired through financial leases, where all the risk and control rests essentially with the Group, includes the following: Auto and equipment leases 98 81 - Total future lease payments 266 659 104 NOK in million 2015 2014 Maturity Recognised historical cost of financial leases 24 21 Maturity after more 2014 within 1 year 1-5 years than 5 years Accumulated depreciation -13 -10 Book value at 31 December 11 11 Payment for leased premises (gross) 157 551 105 Subleasing of premises 26 -18 0 The maturity of the financial leases are presented in Note 18. Net payments after deduction of subleasing 182 533 105
Auto and equipment leases 65 59 - Total future lease payments 247 592 105 ATEA ASA ANNUAL REPORT 2015 70
NOTE 12 – GOODWILL AND INTANGIBLE ASSETS
Contracts and Computer Total other Contracts and Computer Total other customer software intangible customer software intangible NOK in million Goodwill relationships and rights assets NOK in million Goodwill relationships and rights assets Accumulated value at 1 January 2014 - - -17 -17 Acquisitions Write-down additions - - -10 -10 Accumulated value at 1 January 2014 3,132 494 694 1,188 Currency translation differences write-down - - -1 -1 Changes from prior years - - 1 1 Accumulated value at December 2014 - - -28 -28 Additions Changes from prior years - - 5 5 Ordinary additions - - 106 106 Write-down additions - - -6 -6 Business combinations (see Note 23) 339 93 0 93 Currency translation differences write-down - - -1 -1 Disposals 1) - - -38 -38 Accumulated value at 31 December 2015 - - -31 -31 Currency translation effects 117 21 35 56 Accumulated value at 31 December 2014 3,588 608 798 1,405 Acquisition cost 3,588 608 798 1,405 Changes from prior years 1 -6 0 -6 Accumulated amortisation and write-downs - -478 -559 -1,037 Additions Book value at 31 December 2014 3,588 130 239 369 Ordinary additions - - 116 116 Business combinations (see Note 23) 43 19 0 20 Acquisition cost 3,815 654 952 1,606 Disposals 1) - - -6 -6 Accumulated amortisation and write-downs - -550 -699 -1,249 Currency translation effects 183 34 43 77 Book value at 31 December 2015 3,815 104 253 357 Accumulated value at 31 December 2015 3,815 654 952 1,606 1) Gain/loss on the disposal of property, plant and equipment accounted for insignificant amounts in 2014 and 2015. Accumulated amortisation and write-downs Accumulated value at 1 January 2014 - -413 -433 -845 Allocations of goodwill Changes from prior years - - -0 -0 Amortisation - -45 -94 -139 NOK in million 2015 2014 Business combinations (see Note 23) - - - - Disposals 1) - - 16 16 Norway 1,068 1,068 Currency translation effects - -20 -19 -39 Sweden 705 646 Accumulated value at 1 January 2014 - -478 -530 -1,008 Denmark 1,634 1,535 Changes from prior years - 6 -0 6 Finland 172 162 Amortisation - -50 -102 -152 The Baltics 236 178 Business combinations (see Note 23) - - - - Total 3,815 3,588 Disposals 1) - - 0 0 Currency translation effects - -28 -35 -64 Acqusitions from business combinations are described in Note 23. The Group does not have any significant Accumulated value at 1 January 2015 - -550 -668 -1,218 research expenses. Development costs related to internal systems are capitalised in the balance sheet with NOK 32 million (NOK 56 million in 2014). ATEA ASA ANNUAL REPORT 2015 71
Goodwill impairment test NOTE 13 – INVESTMENTS IN ASSOCIATED COMPANIES Goodwill and other assets are allocated to the Group’s cash-generating units. Atea allocates goodwill to the actual country of operation (segment) where the operations are located. The Group had one associated company as at 31 December 2015, the investment in the associated company is Goodwill has an indefinite useful life and is not amortised, but impairment losses are recognised if the recoverable not considered material for the Group. amount is less than the cost price. Owner- Recoverable amounts for cash-generating units are estimated based on calculating the asset’s value in use. Cash Entity Country Industry ship interest flow forecasts are used based on the budget for revenues, product/service mix, profit margins, costs and capital employment. Budgeted revenue growth for the period 2016-2019 varies between 1.7 % - 6.0 %*, depending on Konsertsystemer LLB AS Norway Events and concert systems 55 % the geographic market. Cash flows beyond these five years are based on an expected growth rate of 1.6 % -3.2 % for an indefinite period. 1) Associates are recognized on the balance sheet using the equity method. Atea owns 55 percent of the shares and Risk is taken into account through a discount rate that reflects the weighted average cost of capital (WACC) for voting rights in Konsertsystemer LLB AS. According to the shareholder’s agreement, a 67 percent Board majority the individual cash-generating units. is required for major decisions. Atea does not have the right to elect more than 2 out of 5 Board members. For this reason, it is concluded that the Group does not have control over Konsertsystemer LLB AS. WACC ( Weighted Average Cost of Capital) used 2): 2015 2014 Norway 6.6% 8.7% Reconsiliation of summmarised Konsertsystemer financial information LLB AS Sweden 5.8% 7.3% Denmark 5.9% 7.2% Book value at 1 January 2015 9 Finland 5.6% 6.9% Investments/disposals 0 The Baltics 3) 5.9% 7.9% Share of profit after tax 2015 0 1) Determined primarily by external market analyses. Book value at 31 December 2015 9 2) At 30 September. 3) Volume-weighted average for Estonia, Latvia and Lithuania. ATEA ASA ANNUAL REPORT 2015 72
NOTE 14 – INVENTORIES There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers spread across several countries. Maximum exposure to receivables corresponds to NOK 5,988 million NOK in million 2015 2014 (NOK 5,496 million in 2014).
The Group has a maximum limit of NOK 1,000 million ( NOK 1,000 million in 2014 ) through a factoring agreement. Cost of inventories 817 688 All trade receivables have been pledged as security for this facility. See Note 18 for additional information. Accumulated provisions for write-downs -55 -55 Book value at 31 December 762 632 The Group has recognised a loss of NOK 6 million related to trade receivables in 2015. (NOK 4 million in 2014). See Note 7. Provision for write-downs at 1 January -55 -53 See otherwise Note 3.1.2 with regard to credit risk. Additional provisions -4 -4 Used provisions 6 2 Maturity analysis for trade receivables not due: Foreign exchange effects on inventory write-downs -2 -2 Provision for write-downs at 31 December -55 -55 NOK in million 2015 2014
Write-down of inventories recognised as an expense and included in cost of goods sold 4 1 Non-due < 30 5,432 4,959 Non-due 31-90 210 89 Inventory of spare parts are written-down over the length of Service contracts. Non-due > 91 2 18 Total 5,645 5,066 NOTE 15 – TRADE AND OTHER RECEIVABLES Maturity analysis for trade receivables due: NOK in million 2015 2014 NOK in million 2015 2014
Trade receivables 6,014 5,517 Maturity < 30 days 274 402 Provisions for bad debts -26 -21 Maturity 31-90 days 62 54 Net book value of trade receivables 5,988 5,496 Maturity > 91 days 33 -4 Total 369 451 Prepaid expenses 620 547 Other current receivables 247 229 Other receivables 867 777 Total trade and other receivables 6,855 6,273
Other long-term receivables 3 0 Total other long-term receivables 3 0
Provisions for bad debts at 1 January -21 -18 Additional provisions -8 -6 Used provisions 6 0 Amount written off as uncollectable -1 1 Amount collected during the year 0 2 Foreign exchange effect on bad debts -1 -1 Provisions for bad debts at 31 December -26 -21 ATEA ASA ANNUAL REPORT 2015 73
NOTE 16 – PAID-IN EQUITY, OPTIONS AND SHAREHOLDERS
Number of shares Share capital 2015 2014 Treasury Treasury Share Total paid-in Number of Weighted average Number of Weighted average Issued shares Issued shares premium equity options exercise price options exercise price Whole figures Whole figures NOK in million NOK in million NOK in million NOK in million Whole figures NOK Whole figures NOK
At 1 January 2014 103,181,020 -73,601 1,032 -1 61 1,092 Outstanding at 1 Jan 3,679,191 49 3,365,669 52 Issue of share capital 987,144 0 10 0 38 48 Granted 3,778,335 68 1,495,000 57 At 31 December 2014 104,168,164 -73,601 1,042 -1 99 1,140 Exercised -1,245,003 45 -987,144 48 Lapsed/terminated -86,913 47 -156,334 53 At 1 January 2015 104,168,164 -73,601 1,042 -1 99 1,140 Expired - - -38,000 52 Issue of share capital 1,002,547 - 10 - 35 45 Outstanding at 31 Dec 6,125,610 57 3,679,191 49 Changes related Vested options 577,827 45 339,486 47 to own shares - -502,878 - -5 - -5 At 31 December 2015 105,170,711 -576,479 1,052 -6 134 1,180 A total of 3,778,335 share options were granted in 2015 (1,495,000 share options granted in 2014). The weighted average value of the share options granted in 2015 was NOK 14.70 (NOK 13.50 in 2014). The share options were In 2014 and 2015 the nominal value of shares was NOK 10 per share. All the shares have equal rights. All the valued by a third party according to the Black-Scholes valuation model. The conditions for exercising the different shares issued by the company are fully paid. share option programmes are set for each programme on an individual basis.
Treasury shares Terms of the outstanding options are as follows: Atea ASA holds 576,479 treasury shares at 31 December 2015 (73,601 at 31 December 2014). Outstanding Exercised The sales price related to own shares in 2015 was NOK 7 million (with remaining NOK 5 million affecting Other Outstanding Weighted Weighted Vested Weighted unrecognized reserves) and related to exercise of options.The cost price related to own shares in 2015 was NOK options at average average options at average 48 million (with remaining NOK 41 million affecting Other unrecognized reserves) and related to share buyback Exercise price 31 Dec 2015 contractual life exercise price 31 Dec 2015 exercise price program announced in June 2015. Whole figures Year NOK Whole figures NOK
Share options 30,00 - 35,00 160,000 1.9 35 20,000 35 Share options have been allotted to the management and selected employees. Each share option allows for the 35,00 - 40,00 - - - - - subscription of one share in Atea ASA. The fair value of the options is calculated when they are allotted and expensed over the vesting period. A cost of NOK 20 million has been charged as an expense in the income statement in 2015 40,00 - 45,00 - - - - - relating to the share option programmes (NOK 20 million in 2014). In addition, National Insurance contribution 45,00 - 50,00 - - - - - expenses of NOK 5 million have been charged as an expense in 2014 (NOK 8 million in 2014) . 50,00 - 55,00 - - - - - 55,00 - 60,00 1,892,150 1.5 57 457,828 57 60,00 - 4,073,460 3.6 68 99,999 70 Total 6,125,610 2.9 64 577,827 59 ATEA ASA ANNUAL REPORT 2015 74
Variables in the model for the allotment of options in 2015: Shares and options owned by key employees who are board members at 31 December 2015
Maturity date Weighted average share price at the time of allotment (NOK) 71 Key employees in the Atea Group Shares 1) Options for options Weighted average exercise price (NOK) 68 Weighted average fair value (NOK) 15 Steinar Sønsteby CEO of Atea ASA - 1,150,000 4 Sept. 2019 Weighted average volatility 28 % Robert Giori CFO of Atea ASA 4,000 266,667 4 Sept. 2019 Weighted average risk-free interest rate 0.7 % Tommy Ødegaard Senior Vice President of Atea ASA - 100,000 4 Sept. 2019 Weighted average expected life (years) 2.8 Carl-Johan Hultenheim Managing Director of Atea AB 10,000 300,000 4 Sept. 2019 Morten Felding Managing Director of Atea A/S - 201,000 4 Sept. 2019 10 largest shareholders at 31 December 2015 1) Shares % Juha Sihvonen Managing Director of Atea Oy - 133,333 4 Sept. 2019 Arunas Bartusevicius Managing Director of Atea Baltic UAB 23,587 100,001 4 Sept. 2019 Systemintegration APS 2) 25,993,510 24.7 % State Street Bank & Trust Co. 3) 8,813,985 8.4 % Board Members of Atea ASA Folketrygdfondet 7,679,966 7.3 % RBC Investor Services Trust 3) 5,304,995 5.0 % Ib Kunøe Board Chairman 26,311,210 - - JP Morgan Chase Bank, NA 3) 3,850,217 3.7 % Morten Jurs Member of the Board - - - J.P. Morgan Chase Bank N.A. London 3) 3,400,437 3.2 % Sven Madsen Member of the Board 117, 5 0 0 - - Skandinaviske Enskilda Banken AB 3) 2,735,376 2.6 % Lisbeth Toftkær Kvan Member of the Board - - - Odin Norge 2,628,887 2.5 % Saloume Djoudat Member of the Board 1,200 - - VPF Nordea Kapital 2,488,872 2.4 % Marthe Dyrud Member of the Board (employee elected) 6,500 - - The Bank of New York Mellon 3) 2,040,872 1.9 % Truls Berntsen Member of the Board (employee elected) - - - Other 40,233,594 38.3 % Stig Penne Member of the Board (employee elected) - - - Total number of shares 105,170,711 100.0 % 1) Direct and indirect ownership. Number of shareholders: 7,153 Percentage of foreign shareholders: 71 % Share option allotment, redemption and holdings for key employees:
1) Holdings at Allotted Exersised Holdings at Exercise Source: Norwegian Central Securities Depository (VPS). 1 Jan 2015 in 2015 in 2015 31 Dec 2015 price (NOK) 2) Includes shares owned by Ib Kunøe. 3) Includes client nominee accounts. Steinar Sønsteby 800,000 350,000 1,150,000 50.45 Robert Giori 200,000 66,667 266,667 60.81 Tommy Ødegaard - 100,000 100,000 64.75 Carl-Johan Hultenheim 66,667 300,000 -66,667 300,000 64.75 Morten Felding 200,000 66,667 -66,666 200,001 52.41 Juha Sihvonen 100,000 33,333 133,333 65.31 Arunas Bartusevicius 66,667 66,667 -33,333 100,001 56.74 ATEA ASA ANNUAL REPORT 2015 75
NOTE 17 – TRADE PAYABLES AND OTHER CURRENT Long-term bank loan, DKK 500 million LIABILITIES The loan was entered into in June 2013 and arranged by Nordea Bank, Denmark. Maturity is June 2018. The loan is secured by a down stream guarantee by Atea ASA. The facility is classified as long-term debt. NOK in million 2015 2014 Unsecured bond loan, NOK 300 million The loan was entered into in June 2013 and arranged by Norsk Tillitsmann. Maturity is June 2018. The loan is Public fees payable 5,707 4,681 listed on Oslo Stock Exchange and was traded as of September 2013. The facility is classified as long-term debt.
Public fees payable 640 578 Overdraft facility Prepayments from customers 652 569 The Group has an overdraft facility of NOK 400 million provided by Nordea Bank Norge ASA. None of this facility had been utilised at 31 December 2015.The loan is secured by a down stream guarantee by Atea ASA. Amounts Accrued holiday payments 497 442 drawn on this facility are classified as short-term debt. The facility has standard terms and conditions for this type Deferred income 351 316 of financing. Other accrued expenses (supplier of goods) 57 153 Other current liabilities 318 357 Money market line Total other current liabilities 2,514 2,417 The Group has a money market line of NOK 375 million provided by Nordea Bank Norge ASA. None of this facility had been utilised at 31 December 2015. The loan is secured by a down stream guarantee by Atea ASA. Total trade payables and other current liabilities 8,222 7,098 Amounts drawn on this facility are classified as short-term debt. The facility has standard terms and conditions for this type of financing. Maturity analysis trade payable: Acquisition facility
NOK in million 2015 2014 The Group has an acquisition facility of NOK 200 million provided by Nordea Bank Norge ASA. None of this facility had been utilised at 31 December 2015. The loan is secured by a down stream guarantee by Atea ASA. Draft on the facility is classified as short-term debt. The facility has standard terms and conditions. Due < 30 4,496 3,868 Due 31-90 1,206 808 Overdraft facility secured by receivables Due > 91 5 6 The Group has an overdraft facility agreement with Nordea Finans in Norway, Sweden and Denmark secured by Total 5,707 4,681 trade receivables. The Group can borrow up to a maximum of 80 % of the outstanding trade receivables through this agreement. The facility limit was NOK 1,128 million in total as of 31 December 2015. The actual drawdown available based on this agreement is based on the size of the trade receivables. As of 31 December 2015 the total drawdown available under this facility was NOK 1,128 million. Drawings on the facility are classified as short-term debt. NOTE 18 – BORROWINGS Trade receivables in Atea AS, Atea Sverige AB and Atea A/S up to NOK 1,250 million are pledged as security NOK in million 2015 2014 for the facility. The loan is secured by a down stream guarantee by Atea ASA. The facility has standard terms and conditions for this type of financing. Long-term loans Financial covenant Long-term interest-bearing loans 960 923 The financial covenant which applies to the above bond facility and the Nordea facilities is a Leverage Ratio for the Financial leases expiring more than one year in the future 222 198 Group of 2.5x. Leverage Ratio means the ratio of Net Interest Bearing Debt to EBITDA. EBITDA in this calculation Total long-term loans 1,182 1,121 is pro forma, i.e. adjusted for acquisition of businesses, and sale of existing business units in the Group. The financial covenant is measured end of each quarter. The Group is compliant with the covenant at the balance date. Short-term loans Short-term interest-bearing loans 125 218 Financial leases expiring less than one year in the future 72 73 Total short-term loans 197 291 Total loans 1,380 1,412 ATEA ASA ANNUAL REPORT 2015 76
The Group is exposed to interest rate changes with respect to loans based on the Maturity analysis for loans 2014 1) following repricing structure: Less than 1-3 3 months 1-5 NOK in million 2015 2014 NOK in million 1 month months to 1 year years Total
6 months or less 99 146 Financial leases 24 24 24 198 271 6-12 months 99 146 Long-term financing - - - 923 923 1-5 years 1,182 1,121 Short-term financing - - 218 - 218 Total 1,380 1,412 Other interest-bearing loans - - - - - Total 24 24 242 1,121 1,412 Interest on the date of the balance sheet was as follows: 1) Includes interest payable. NOK in million 2015 2014
Long-term loans NOTE 19 – LIQUIDITY RESERVE
Bank loan 2.5 % 2.5 % NOK in million 2015 2014 Bond 3.3 % 3.6 % Financial leases - duration more than 1- year 2.5 % 2.5 % Cash and cash equivalents Cash in hand and on deposit 630 583 Short-term loans Unrestricted cash 630 583 Overdraft facility 2.4 % 2.9 % Money market line 2.4 % - Unutilised short-term overdraft facilities 1,993 1,860 Acquisition facility 2.4 % 2.9 % Draft limitation, financial covenant 2) -1,050 -815 Overdraft facility secured by receivables 1.4 % 1.8 % Liquidity reserve 1,573 1,628 Last year instalments for fnancial leases 1.6 % 2.0 %
Average weighted interest rate 1.9 % 2.2 % Loan facilities Long term bank loan (see Note 18) 645 607 1) Maturity analysis for loans 2015 -of which utilised 645 607
Less than 1-3 3 months 1-5 Unsecured bond loan (see Note 18) 300 300 NOK in million 1 month months to 1 year years Total -of which utilised 300 300 Short-term overdraft facility (see Note 18) 400 860 Financial leases 24 24 24 222 294 -of which utilised - - Long-term financing - - - 960 960 Short-term overdraft facility (see Note 18) 375 - Short-term financing - - 125 - 125 -of which utilised - - Other interest-bearing loans - - - - - Short-term overdraft facility (see Note 18) 200 200 Total 24 24 149 1,182 1,380 -of which utilised - 200 Short-term overdraft facility (see Note 18) 1,128 1,000 1) Includes interest payable. -of which utilised 109 -
2) Limited by a bond covenant ratio in 2015 and 2014 of 2.5x EBITDA (net debt/last twelve months pro forma EBITDA). ATEA ASA ANNUAL REPORT 2015 77
NOTE 20 – PROVISIONS
Losses on Profit-sharing Legal and fixed price NOK in million Restructuring and bonuses tax claims contracts Total
At 1 January 2015 9 178 8 16 212 Recognised during the year: Additional provision during the year 3 136 0 23 162 Unutilized provision reversed - -4 - - -4 Used during the year -10 -127 -5 -13 -155 Currency translation effects 0 10 1 1 12 At 31 December 2015 3 193 4 28 227
Losses on Profit-sharing Legal and fixed price NOK in million Restructuring and bonuses tax claims contracts Total
At 1 January 2014 77 90 - 10 177 Recognised during the year: Additional provision during the year 5 154 8 10 177 Used during the year -75 -67 - -4 -145 Currency translation effects 2 2 - 0 3 At 31 December 2014 9 178 8 16 212 ATEA ASA ANNUAL REPORT 2015 78
NOTE 21 – CLASSIFICATION OF FINANCIAL INSTRUMENTS
2015: 2014: Loans and Amortized Loans and Amortized NOK in million receivable cost Fair value 1) NOK in million receivable cost Fair value 1)
Financial assets Financial assets Trade receivables 5,988 5,988 Trade receivables 5,496 5,496 Other receivables 2) 247 247 Other receivables 2) 229 229 Cash and cash equivalents 630 630 Cash and cash equivalents 583 583
Financial liabilities Financial liabilities Interest-bearing long-term liabilities 4) 1,182 1,182 Interest-bearing long-term liabilities 4) 1,121 1,121 Other long-term liabilities 3) 5 5 Other long-term liabilities 4 4 Trade payables 5,707 5,707 Trade payables 4,681 4,681 Interest-bearing current liabilities 197 197 Interest-bearing current liabilities 291 291 Other financial liabilities 22 22 Other financial liabilities 13 13 Other current liabilities 3) 2,139 2,139 Other current liabilities 3) 2,063 2,063
1) Book value is a reasonable estimate of fair value in cases where these numbers are identical 2) Less prepaid expenses 3) Less provision for restructuring and other provision 4) Interest-bearing long-term liabilities mainly includes unsecured bond loan, NOK 300 million and Long term bank loan, DKK 500 million. See Note 18 ATEA ASA ANNUAL REPORT 2015 79
NOTE 22 – CORPORATE STRUCTURE OF THE ATEA GROUP
Voting Voting rights/ rights/ Local ownership Primary Local ownership Primary From date currency (%) activity From date currency (%) activity
Holding The Baltics Atea ASA NOK Listed Holding Atea Baltic UAB EUR 100. 00 % Holding Atea UAB EUR 100. 00 % IT infrastructure Norway Atea AS (Estonia) EUR 100. 00 % IT infrastructure Atea AS NOK 100. 00 % IT infrastructure Atea Finance Lithuania UAB EUR 100. 00 % Leasing Imento Norge AS NOK 100. 00 % IT infrastructure Solver UAB EUR 100. 00 % IT infrastructure Atea Finans AS NOK 100. 00 % Leasing Atea Finance OÜ EUR 100.00 % IT infrastructure EIT Sprendimai UAB EUR 100. 00 % IT infrastructure Sweden BMK UAB EUR 100. 00 % IT infrastructure Atea Holding AB SEK 100. 00 % Holding Kauno BMK UAB EUR 100. 00 % IT infrastructure Atea Sverige AB SEK 100. 00 % IT infrastructure KSC UAB EUR 100. 00 % IT infrastructure Dropzone AB SEK 100. 00 % IT infrastructure Prezentaciju spektras UAB EUR 100. 00 % IT infrastructure Atea Finans AB SEK 100. 00 % Leasing Baltneta UAB 8 Apr 2015 EUR 100.00 % IT infrastructure CRC SIA EUR 100. 00 % IT infrastructure Denmark Atea SIA EUR 100. 00 % IT infrastructure Atea Danmark Holding A/S DKK 100. 00 % Holding Atea A/S DKK 100. 00 % IT infrastructure Group Shared Services DTK Audio Produkter A/S DKK 100. 00 % IT infrastructure Atea Logistics AB SEK 100. 00 % Group Shared Services Atea Danmark A/S DKK 100. 00 % IT infrastructure Atea Global Services SIA EUR 100. 00 % Group Shared Services AT Vision ApS DKK 100. 00 % IT infrastructure For Investments in associated companies, see Note 13. Axcess Holding ApS DKK 100. 00 % IT infrastructure Axcess A/S DKK 100. 00 % IT infrastructure Axcess Nordic ApS DKK 100. 00 % IT infrastructure Atea Finans A/S DKK 100. 00 % Leasing
Finland Atea Holding Oy EUR 100. 00 % Holding Atea Oy EUR 100. 00 % IT infrastructure Topnordic Finland Oy EUR 100. 00 % IT infrastructure BCC Finland Oy EUR 100. 00 % IT infrastructure Atea Finance Finland Oy EUR 100. 00 % Leasing ATEA ASA ANNUAL REPORT 2015 80
NOTE 23 – BUSINESS COMBINATIONS
2015: Breakdown of the acquired net assets and goodwill in 2015 is as follows: Acquisitions in 2015 Atea has acquired one company during 2015. The financial performance from the acquisition date to the end of NOK in million Baltneta UAB the year for the acquired company is considered to be immaterial from a Group perspective. Deferred tax assets 0 UAB Baltnetos Komunikacijos (Baltneta): Goodwill 14 Atea acquired Baltneta in April 2015. Cloud is a strategic business area for Atea, and the acquisition of Baltneta Computer software and rights 0 enables Atea to offer its customers state-of-the-art cloud and IT outsourcing services from the Baltic region. Property, plant and equipment 34 Allocation of purchase price Other long-term receivables 0 Due to the high knowledge and low capital requirements for operating an IT sales and consulting organization, Inventories 1 acquisitions within this sector will typically result in a goodwill balance. This goodwill balance represents the Trade receivables 8 surplus of the purchase price compared with the accounting value of the net fixed and intangible assets of the Other receivables 0 acquired company. Cash and cash equivalents 6 The fair values have been determined on provisional basis because new information may occur. Total asset 65
Breakdown of the acquired net assets and goodwill in 2015 is as follows: Non-current liabilities -24
NOK in million Baltneta UAB Current liabilities -9 Short-term interest-bearing liabilities -2 Acquisition date 8 Apr 2015 Total liabilities -35 Country Lithuania Net assets acquired 30 Voting rights/ownership interest 100 % Acquisition cost: Net cash payments in connection with the acquisitions are as follows: Consideration 1) 69 Adjustment of cost price 4 NOK in million Baltneta UAB Liabilities assumed 2 Total acquisition cost 75 Considerations and costs in cash and cash equivalents 69 Book value of equity (see table below) 30 Cash and cash equivalents in acquired companies -6 Identification of excess value: Net cash payments for the acquisitions 63 Contracts and customer relationships 19 Deferred tax -3 If all acquired entities had been consolidated from 1 January 2015, the consolidated pro forma income Net excess value 16 statements for 2015 would show revenue and profit as follows: Fair value of net assets acquired, excluding goodwill 46 Controlling ownership interests 46 NOK in million 2015 2014 Goodwill 29 Operating revenue 27,921 25,604 1) Consideration that is dependent on future results is recognised as an obligation based on the fair value at the time Operating profit (EBIT) 517 645 of acqusition ATEA ASA ANNUAL REPORT 2015 81
2014: Atea has acquired four companies during 2014. The financial performance from the acquisition date to the end of AT Vision ApS: the year for the acquired companies is considered to be immaterial from a Group perspective. Atea acquired AT Vision ApS in December 2014 which is the holding company of Axcess. The acquisition will strengthen Atea's position within the IT networks and network security business in Denmark. BCC Finland Oy: Atea acquired BCC Finland Oy in April 2014. The acquisition will strengthen Atea’s market position in western and Allocation of purchase price eastern Finland in the hardware segment, and will provide additional scale to Atea’s service operations in this region. Due to the high competence and low capital requirements for operating an IT sales and consulting organization, acquisitions within this sector will typically result in a goodwill balance. This goodwill balance represents the Datatech AS: surplus of the purchase price compared with the accounting value of the net fixed and intangible assets of the Atea acquired Datatech AS in September 2014. The acquisition of Datatech will strengthen Atea's solution offering acquired company. to customers within the maritime and offshore industries in Norway. The fair values have been determined on provisional basis because new information may occur. Imento Norge AS: Atea acquired Imento Norge AS in December 2014. The acquisition will strengthen Atea's position in the Norwegian IT infrastructure market and in the SMB segment in particular.
Breakdown of the acquired net assets and goodwill in 2014 is as follows:
NOK in million BCC Finland Oy Datatech AS Imento Norge AS AT Vision ApS Total
Acquisition date 8 Apr 2014 12 Sep 2014 30 Dec 2014 22 Dec 2014 Country Finland Norway Norway Denmark Voting rights/ownership interest 100 % 100 % 100 % 100 % Acquisition cost: Consideration 1) 3 32 36 411 482 Liabilities assumed - - 5 - 5 Total acquisition cost 3 32 41 411 487 Book value of equity (see table below) 3 6 13 58 79 Identification of excess value: Contracts and customer relationships - 5 2 85 92 Deferred tax - -1 -0 -20 -22 Net excess value - 4 1 65 71 Fair value of net assets acquired, excluding goodwill 3 9 14 123 149 Controlling ownership interests - 9 14 123 147 Goodwill 0 23 27 288 338
1) Consideration that is dependent on future results is recognized as an obligation based on the fair value at the time of acqusition. ATEA ASA ANNUAL REPORT 2015 82
Assets and liabilities associated to the acquisitions in 2014 are as follows:
NOK in million BCC Finland Oy Datatech AS Imento Norge AS AT Vision ApS Total
Deferred tax assets 0 - - 0 0 Goodwill - - 0 0 0 Computer software and rights 0 - - - 0 Property, plant and equipment 1 0 0 21 23 Other long-term interest-bearing receivables 0 - - - 0 Other long-term receivables 0 - 0 - 0 Inventories 1 1 3 14 19 Trade receivables 6 5 32 176 219 Other receivables 1 0 6 17 25 Cash and cash equivalents 1 5 2 29 36 Total asset 10 11 45 257 324
Non-current liabilities -1 - - -15 -15 Current liabilities -7 -6 -34 -185 -232 Short-term interest-bearing liabilities - - 2 0 3 Total liabilities -8 -6 -32 -200 -245 Net assets acquired 3 6 13 58 79
Net cash payments in connection with the acquisitions are as follows:
NOK in million BCC Finland Oy Datatech AS Imento Norge AS AT Vision ApS Total
Considerations and costs in cash and cash equivalents 3 32 36 411 482 Cash and cash equivalents in acquired companies -1 -5 -2 -29 -36 Net cash payments for the acquisitions 2 27 34 382 446
If all acquired entities had been consolidated from 1 January 2014, the consolidated pro forma income statements for 2014 would show revenue and profit as follows:
NOK in million 2014 2013
Operating revenue 25,469 22,127 Operating profit (EBIT) 630 352 ATEA ASA ANNUAL REPORT 2015 83
NOTE 24 – CONTINGENT LIABILITIES AND ASSETS NOTE 25 – COMMITMENTS
Ordinary course of business NOK in million 2015 2014 The Group has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities. Guarantees to financial institutions 1) 3,694 3,520 The Group has given guarantees in the ordinary course of business amounting to NOK 6,777 million (NOK 6,250 2) in 2014) to external parties (see Note 25). Guarantees to business associates 2,912 2,554 Bank guarantees 3) 114 107 Legal disputes Residual value obligations related to leasing activities 4) 57 68 Atea (the Group) is involved in lawsuits in various jurisdictions. The outcome for a number of these cases is uncertain. Total guarantees 6,777 6,250 Based on the information available to the company, however, the management is of the opinion that these cases will be resolved without significantly weakening the Group's financial standing. If the disputes nevertheless end 1) Atea ASA has issued guarantees in favour of Nordea Bank and Nordea Finans as security for the facilities provided with a negative outcome, Atea is insured in most cases and no provisions have, therefore, been set aside in the for the Atea ASA and subsidiaries (see Note 18). Part of this facility concernes a sublease facility. At the end of 2015 accounts beyond the company's own risk. In cases where the Group finds that it is probable that a legal dispute the Group had total outstanding subleasing of NOK 356 million (NOK 463 million at the end of 2014). will result in a payment and the payment is not covered by insurance, provisions will be set aside based on the 2) As part of the ordinary operations, parent company guarantees are furnished to suppliers and partners on behalf of management's best estimate. subsidiaries. 3) As a regular part of the ordinary operations, guarantees are given for fulfilment of contracts, advances from customers Possible bribery case in Atea Denmark and lease matters. Such guarantees usually involve a financial institution issuing a guarantee as security for the customer. In addition, this amount includes NOK 71 million in tax withholding guarantees. Atea’s subsidiary in Denmark has been impacted by a possible bribery case, which was announced in June 2015. 4) The leasing companies have a residual value obligation of NOK 57 million (NOK 68 million in 2014) on the outstanding This had a negative consequence on the financial results in Atea Denmark in 2015. The longer-term impact of the leasing contracts. No losses have been incurred as a result of this, and the risk of incurring losses is considered to be low. case on revenue and costs in Denmark is uncertain. The possible bribery case also involves a competitor of Atea Denmark. Charges have been placed against three current executives of the competing company, which all held It is considered improbable (i.e. < 10 %) that Atea ASA will incur any charges as a result of guarantee liabilities leading positions within Atea Denmark prior to establishing their own company. the company has incurred on behalf of the subsidiaries.
Since the charges were announced, Atea management has cooperated fully with Danish law enforcement in the Since the financing companies were established in 2007, no losses have been incurred with respect to the residual investigation. Atea has given transparent reports on the case to clients, suppliers, shareholders and governmental value of leasing activities. agencies. Atea has also intensified corporate communication activities on the basis of being a transparent company and with the purpose of protecting the Atea brand and company reputation. Pledged assets Trade receivables in Atea AS (Norway), Atea A/S (Denmark) and Atea Sverige AB (Sweden) are pledged as Atea has updated its internal Code of Conduct. All employees are obliged to take an examination on this code and security for the factoring facility (see Note 18). The book value of trade receivables pledged as security is NOK agree to comply with it. Atea is also sharpening its control routines on expenses and on client events. Finally, Atea 1,250 million (NOK 1,250 million in 2014). has established a Compliance organization reporting to the Board of Directors, and enhanced its “whistleblower” scheme for employees to report violations of the Code of Conduct or relevant law. These reports can be given on an anonymous basis. ATEA ASA ANNUAL REPORT 2015 84
NOTE 26 – RELATED PARTIES
Atea has ongoing transactions with related parties. All the transactions are in accordance with the arm's length principle and as part of the ordinary operations. The most important transactions are listed below.
The transactions have been carried out by companies controlled by Ib Kunøe, who is the Board Chairman and largest shareholder of Atea ASA thorugh the company Systemintegration ApS and Managing Director of Atea Baltic UAB Arunas Bartusevicius.
Sales to(+)/from(-) Credit (+)/debit (-) balances related parties with related parties NOK in million 2015 2014 2015 2014
Marketing activities -1.9 -0.5 -0.8 -0.2 Leasing of property or equipment 2.1 4.5 0.0 -1.4 Development of software -0.9 -1.3 -0.1 -0.3 Other -0.3 -0.5 1.0 -0.3
NOTE 27 – EVENTS AFTER THE BALANCE SHEET DATE
There were no significant events after the balance sheet date which could affect the evaluation of the reported accounts. ATEA ASA ANNUAL REPORT 2015 85 ATEA ASA ANNUAL REPORT 2015 86
Atea ASA Financial Statements and Notes
Content
Income Statement 87 Note 1 – General information and Note 7 – Shares in subsidiaries 96 Statement of Comprehensive Income 87 accounting principles 91 Note 8 – Trade and other receivables 97 Statement of Financial Position 88 Note 2 – Sensitivity analysis 91 Note 9 – Paid-in capital, shareholders and options 98 Statement of Cash Flow 89 Note 3 – Employee compensation and audit fee 93 Note 10 – Trade payables and other current liabilities 99 Statement of Changes in Equity 90 Note 4 – Net financial items 93 Note 11 – Borrowings 99 Financial Notes 91 Note 5 – Taxes 94 Note 12 – Liquidity reserve 100 Note 6 – Property, plant and equipment, and Note 13 – Classification of financial instruments 101 intangible assets 95 Note 14 – Commitment 101 ATEA ASA ANNUAL REPORT 2015 87
Income Statement Atea ASA
NOK in million Note 2015 2014
Revenue 1 27 24 Employee benefits expense 3 -31 -39 Depreciation and amortization 6 -1 -0 Other operating expenses -19 -15 Operating loss -23 -30 Financial income 4 1,159 737 Financial expenses 4 -505 -300 Net financial items 4 654 437 Profit before tax 630 407 Tax on continued operations 5 -12 -72 Profit for the period 619 335
Earnings per share – earnings per share 5.92 3.28 – diluted earnings per share 5.85 3.26
Statement of Comprehensive Income Atea ASA
NOK in million 2015 2014
Profit for the period 619 335 Items that will not be reclassified subsequently to profit or loss - -
Other comprehensive income - - Total comprehensive income for the period 619 335 ATEA ASA ANNUAL REPORT 2015 88
Oslo, 16 March 2016 Statement of Financial Position Atea ASA
NOK in million Note 2015 2014 Ib Kunøe Chairman of the Board ASSETS Property, plant and equipment 6 1 1 Deferred tax assets 5 152 164 Other intangible assets 6 0 0 Morten Jurs Other long-term receivables 11, 13 1,836 956 Investments in subsidiaries 7 2,531 2,518 Non-current assets 4,521 3,639 Trade receivables 8, 13 38 24 Sven Madsen Other receivables 8, 13 275 438 Cash and cash equivalents 12, 13 362 233 Current assets 675 694 Total assets 5,195 4,334 Saloume Djoudat
EQUITY AND LIABILITIES Share capital and premium 9 1,180 1,140 Other unrecognised reserves 766 766 Retained earnings 338 416 Lisbeth Toftkær Kvan Equity 2,285 2,322 Interest-bearing long-term liabilities 11, 13 300 300 Other long-term liabilities 11, 13 0 76 Non-current liabilities 300 376 Marthe Dyrud Trade payables 10, 13 3 2 Interest-bearing current liabilities 11, 12 0 200 Other current liabilities 10, 13 16 17 Other financial liabilities 2,591 1,415 Truls Berntsen Current liabilities 2,610 1,635 Total liabilities 2,910 2,011 Total equity and liabilities 5,195 4,334
Stig Penne
Steinar Sønsteby CEO ATEA ASA ANNUAL REPORT 2015 89
Statement of Cash Flow Atea ASA
NOK in million Note 2015 2014
Profit before tax 630 407 Depreciation and amortization 1 0 Options 7 6 Change in trade and other receivables 149 -182 Change in other accruals -346 -217 Net cash flow from operational activities 441 14
Purchase of property, plant and equipment and intangible assets - -2 Net cash flow from investment activities - -2
Purchase/sale of treasury shares 9 -41 - Proceeds from new issues 9 45 48 Dividends paid -679 -622 Proceeds from raising loans 363 766 Net cash flow from financing activities -311 192
Net change in cash and cash equivalents for the year 129 205 Cash and cash equivalents at the start of the year 12 233 28 Cash and cash equivalents at the end of the year 12 362 433 ATEA ASA ANNUAL REPORT 2015 90
Statement of Changes in Equity Atea ASA
Other unrecognized Share capital and premiums reserves Retained earnings Share Other Option Retained NOK in million Share capital 1) premium paid-in capital programmes earnings Total equity
Balance at 1 January 2014 1,031 61 766 101 582 2,541 Profit for the year - - - - 335 335 Issue of share capital 10 38 - - - 48 Employee share option programmes, value of employee contributions - - - 20 - 20 Dividend - - - - -622 -622 Equity at 31 December 2014 1,041 99 766 121 295 2,322
Balance at 1 January 2015 1,041 99 766 121 295 2,322 Profit for the year - - - - 619 619 Issue of share capital 10 35 - - - 45 Employee share option programmes, value of employee contributions - - - 18 - 18 Dividend - - - - -679 -679 Changes related to own shares -5 - - - -35 -41 Equity at 31 December 2015 1,046 134 766 140 199 2,285
1) See also Note 9. ATEA ASA ANNUAL REPORT 2015 91
NOTE 1 – GENERAL INFORMATION AND ACCOUNTING PRINCIPLES
About Atea ASA Accounting principles These are the financial statements of Atea ASA, which is the holding company for the Group and includes the The accounts have been prepared in accordance with simplified IFRS pursuant to section 3-9 of the Norwegian Group’s top management and associated staff functions (9 employees) at 31 December 2015. See also Note 1 Accounting Act. In the parent company dividends and group contribution have been accounted for according to in the Group’s consolidated financial statements. simplified IFRS. The explanation of the accounting policies also apply to the parent company, and the notes to the consolidated financial statements will in some cases cover the parent company. Revenue Atea ASA charges group costs to subsidiaries. As a holding company, Atea ASA is a purely administrative unit Critical accounting estimates and assessments in applying the group’s accounting policies is mainly related to offering services for the subsidiaries in all the countres. the valuation of assets (shares in subsidiaries with a book value of NOK 2,531 million, long-term receivables from subsidiaries of NOK 1,836 million, as well as deferred tax assets of NOK 152 million at 31 December 2015). See also Note 4 in the Group’s consolidated financial statements.
There may be figures and percentages that do not always add up correctly due to rounding differences.
NOTE 2 – SENSITIVITY ANALYSIS
Sensitivity analysis 2015: Interest rate risk Foreign currency risk + 200 bp 1) - 200 bp 1) + 10 % - 10 % Amount Effect on Other effects Effect on Other effects Effect on Other effects Effect on Other effects NOK in million affected profit/loss on equity profit/loss on equity profit/loss on equity profit/loss on equity
Financial assets - NOK 1,547 31 - -31 ------SEK 737 15 - -15 - 74 - -74 - - DKK 117 2 - -2 - 12 - -12 - - EUR 81 2 - -2 - 8 - -8 - - USD -211 -4 - 4 - -21 - 21 - Effect on financial assets before tax 45 - -45 - 72 - -72 - Tax expense (27 %) -12 - 12 - -20 - 20 - Effect on financial assets after tax 33 - -33 - 53 - -53 -
Financial liability items - NOK 300 -6 - 6 ------EUR ------Effect on financial liability items before tax -6 - 6 - - - - - Tax expense (27 %) 2 - -2 - - - - - Effect on financial liability items after tax -4 - 4 - - - - - Total increase/reduction 29 - -29 - 53 - -53 -
1) Basis points. ATEA ASA ANNUAL REPORT 2015 92
Sensitivity analysis 2014: Interest rate risk Foreign currency risk + 200 bp 1) - 200 bp 1) + 10 % - 10 % Amount Effect on Other effects Effect on Other effects Effect on Other effects Effect on Other effects NOK in million affected profit/loss on equity profit/loss on equity profit/loss on equity profit/loss on equity
Financial assets - NOK 367 7 - -7 ------SEK 641 13 - -13 - 64 - -64 - - DKK 278 6 - -6 - 28 - -28 - - EUR 70 1 - -1 - 7 - -7 - - USD -73 -1 - 1 - -7 - 7 - Effect on financial assets before tax 26 - -26 - 92 - -92 - Tax expense (27 %) -7 - 7 - -25 - 25 - Effect on financial assets after tax 19 - -19 - 67 - -67 -
Financial liability items - NOK 576 -12 - 12 ------EUR ------Effect on financial liability items before tax -12 - 12 - - - - - Tax expense (27 %) 3 - -3 - - - - - Effect on financial liability items after tax -8 - 8 - - - - - Total increase/reduction 10 - -10 - 67 - -67 -
1) Basis points. ATEA ASA ANNUAL REPORT 2015 93
NOTE 3 – EMPLOYEE COMPENSATION AND AUDIT FEE NOTE 4 – NET FINANCIAL ITEMS
NOK in million 2015 2014 NOK in million 2015 2014
Wages and salaries to employees 19 22 Foreigh exchange effects 1) 488 233 Total social security costs 3 5 Dividend from subsidiaries 379 46 Option plans for the management and employees 8 9 Group contribution and other financial income 2) 210 341 Pension costs 1 0 Interest income from subsidiaries 45 68 Other personnel costs 0 3 Other interest income 3) 37 48 Total employee compensation and benefit expenses 31 39 Total financial income 1,159 737
Average number of full time employees 8 12 Foreign exchange effects 1) -426 -204 Interest expenses from other loans 3) -76 -89 Wages and remuneration to the CEO, CFO, Board of Directors and the employees’ share option plans are described Other financial expense -3 -2 in Note 6 in the Group’s consolidated financial statements. Interest expenses from subsidiaries -1 -5 Total financial expenses -505 -300 Deloitte is the auditor of Atea ASA. The table below shows Deloitte’s total charges for auditing and other services in 2015. All amounts are exclusive of VAT. Total net financial items 654 437
NOK in million 2015 2014 1) Unrealised foreign exchange effects related to the company's long-term intercompany loans in 2015 NOK 80 million (NOK 35 million in 2014). Net unrealized foreign exchange gain during the term of the loan is NOK 317 million.
Auditor's fees 1 1 2) Group contribution from Atea AS (Norway) in 2015 NOK 200 million (NOK 341 million in 2014). Assurance services - - 3) Interest paid in 2015 is NOK 76 million (NOK 89 million in 2014). Tax advisory services - - Interests received in 2015 is NOK 37 million (NOK 48 million in 2014). Other non-audit services - 0 Total 1 1 ATEA ASA ANNUAL REPORT 2015 94
NOTE 5 – TAXES
Income tax recognised in profit or loss: Deferred tax balances are presented in the statement of financial position as follows:
NOK in million 2015 2014 NOK in million 2015 2014
Current tax - - Deferred tax assets related to carryforward losses 2) 152 177 Deferred tax 12 72 Deferred tax assets related to temporary difference 2 3 Total income tax expenses 12 72 Deferred tax liabilities -2 -16 Net deferred tax assets 152 164 The income tax expense for the year can be reconciled to the accounting profit as follows: 1) The income tax rate in Norway will change from 27% in 2015 to 25% in 2016. NOK in million 2015 2014 2) Atea ASA tax loss carryforwards amounted to NOK 608 million at the end of 2015 (NOK 655 million at the end of 2014). There are no time restrictions on the utilisation of tax loss carryforwards. Profit before tax 630 407 Taxes calculated at the rate of 27% 170 110 Tax effect of: - income non taxable and expenses non deductible -170 -38 - effect of deferred tax balances due to the change in income tax rate 1) 12 - Total income tax expenses 12 72
Effective tax rate 1.9 % 17.7 %
Atea ASA does not have any tax payable because the company has a tax loss carryforward. ATEA ASA ANNUAL REPORT 2015 95
NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, AND INTANGIBLE ASSETS
PPE Intangible assets Machinery,furniture/fittings IT systems, Capitalised NOK in million and computer equipment rights etc. development Total
Acquisition cost Accumulated value at 1 January 2014 1 1 - 2 Additions 1 - 1 2 Disposals - - -2 -2 Accumulated value at 31 December 2014 2 1 - 3 Additions - - - - Disposals - - - - Accumulated value at 31 December 2015 2 1 - 3
Accumulated depreciation and write-downs - Accumulated value at 1 January 2014 -1 -0 - -1 Depreciation and amortization for the year -0 -0 - -0 Accumulated value at 31 December 2014 -1 -1 - -2 Depreciation and amortizationfor the year -0 -0 - -1 Accumulated value at 31 December 2015 -1 -1 - -2
Accumulated value at 1 January 2014 - - - - Disposals, write-down - - - - Accumulated value at 31 December 2014 - - - - Disposals, write-down - -0 - -0 Accumulated value at 31 December 2015 - -0 - -0
At 31 December 2014 Acquisition cost 2 1 - 3 Accumulated depreciation and amortization -1 -1 - -2 Book value at 31 December 2014 1 0 - 1
At 31 December 2015 Acquisition cost 2 1 - 3 Accumulated depreciation and amortization -1 -1 - -2 Accumulated value at 31 December 2015 1 0 - 1 ATEA ASA ANNUAL REPORT 2015 96
NOTE 7 – SHARES IN SUBSIDIARIES
Financial year 2015 Ownership and Equity at NOK in million Head office voting share (%) 31 December Book value Primary activity
Atea AS (Norway) Oslo, Norway 100.00 1,300 426 IT infrastructure Atea Holding AB (Sweden) Stockholm, Sweden 100.00 440 311 IT infrastructure Atea Holding A/S (Denmark) Copenhagen, Denmark 100.00 924 1,300 IT infrastructure Atea Holding OY (Finland) Helsinki, Finland 100.00 270 292 IT infrastructure Atea Baltic UAB (Baltics) Vilnius, Lithuania 100.00 196 203 IT infrastructure Other dormant companies - Total shares in subsidiaries 2,531
Financial year 2014 Ownership and Equity at NOK in million Head office voting share (%) 31 December Book value Primary activity
Atea AS (Norway) Oslo, Norway 100.00 1,043 415 IT infrastructure Atea Holding AB (Sweden) Stockholm, Sweden 100.00 387 308 IT infrastructure Atea Holding A/S (Denmark) Copenhagen, Denmark 100.00 1,063 1,296 IT infrastructure Atea Holding OY (Finland) Helsinki, Finland 100.00 255 291 IT infrastructure Atea Baltic UAB (Baltics) Vilnius, Lithuania 100.00 188 200 IT infrastructure Other dormant companies 100.00 322 9 Total shares in subsidiaries 2,518 ATEA ASA ANNUAL REPORT 2015 97
NOTE 8 – TRADE AND OTHER RECEIVABLES
NOK in million 2015 2014 Maturity analysis for receivables from subsidiaries 2014
NOK in million < 30 days 31-90 days > 91 days Prepaid expenses 3 3 Receivables from subsidaries 109 117 Norway 7 - - Group contribution 200 341 Sweden 41 - - Total trade and other current receivables 313 462 Denmark 32 - - Finland 15 - - Maturity analysis for receivables from subsidiaries 2015 The Baltics 22 - - NOK in million < 30 days 31-90 days > 91 days Group Shared Services 0 - - Atea Logistics 0 - - Norway 11 - - Total 117 - - Sweden 46 - - Denmark 25 - - Finland 2 - - The Baltics 26 - - Group Shared Services 0 - - Atea Logistics 0 - - Total 109 - - ATEA ASA ANNUAL REPORT 2015 98
NOTE 9 – PAID-IN CAPITAL, SHAREHOLDERS AND OPTIONS
Number of shares Share capital Total share capital Issued Treasury shares Issued Treasury shares Share premium and premiums Whole figures Whole figures NOK in million NOK in million NOK in million NOK in million
At 1 January 2014 103,181,020 -73,601 1,032 -1 61 1,092 Issue of Share capital 987,144 - 10 - 38 48 At 31 December 2014 104,168,164 -73,601 1,042 -1 99 1,140
At 1 January 2015 104,168,164 -73,601 1,042 -1 99 1,140 Issue of Share capital 1) 1,002,547 - 10 0 35 45 Changes related to own shares 2) - -502,878 - -5 - -5 At 31 December 2015 105,170,711 -576,479 1,052 -6 134 1,180
In 2014 and 2015 the nominal value of shares was NOK 10 per share. All the shares have equal rights. All the shares issued by the company are fully paid.
Atea ASA holds 576,479 treasury shares at 31 December 2015 (73,601 at 31 December 2014).
1) Issue of Share capital is related to Share options for the Management and selected employees. Share options have been allotted to the management and selected employees. Each share option allows for the subscription of one share in Atea ASA. The fair value of the options is calculated when they are allotted and expensed over the vesting period. A cost of NOK 7 million has been charged as an expense in the income statement in 2015 relating to the share option programmes (NOK 6 million in 2014). In addition, National Insurance contribution expense of NOK 2 million has been charged as an expense in 2015 (NOK 2 million in 2014).
2) The sales price related to own shares in 2015 was NOK 7 million (with remaining NOK 5 million affecting Other unrecognized reserves) and related to exercise of options. The cost price related to own shares in 2015 was NOK 48 million (with remaining NOK 41 million affecting Other unrecognized reserves) and related to share buyback program announced in June 2015.
ATEA ASA ANNUAL REPORT 2015 99
NOTE 10 – TRADE PAYABLES AND OTHER NOTE 11 – BORROWINGS CURRENT LIABILITIES NOK in million 2015 2014 NOK in million 2015 2014 Long-term receivables 1) Trade payables 2 1 Long-term receivables from subsidiaries 1,836 956 Trade payables in the same group 1 1 Total receivables 1,836 956 Total trade payables 3 2 Long-term loans Deposit in cash pool from subsidiaries 2,591 1,415 Long-term debt to subsidiaries 0 76 Other current liabilities 14 15 Other long-term debt 300 300 Accrued holiday payments 2 2 Interest-bearing long-term liabilities 300 376 Government withholdings and taxes 1 0 Current interest-bearing liabilities 0 200 Short-term loans 2) Total other current liabilities 2,608 1,633 Short-term loan facility 0 200 Total trade payables and other current liabilities 2,610 1,635 Interest-bearing current liabilities 0 200
Maturity < 30 days 3 2 1) Interest is charged on long-term claims against subsidiaries at the 12-month interbank rate plus a company-specific margin calculated based on the subsidiaries’ respective creditworthiness. The interest is charged and falls due annually Maturity 31-90 days - - in arrears. The principal amount will not fall due for payment in the foreseeable future. Maturity > 91 days - - Total 3 2 Unsecured bond loan, NOK 300 million The loan was entered into in June 2013 and arranged by Norsk Tillitsmann. Maturity is June 2018. The loan is listed on Oslo Stock Exchange. The facility is classified as long-term debt.
2) Terms and conditions for the company’s revolving borrowing facilities are described in Notes 18 and 19 in the Group’s consolidated financial statements. ATEA ASA ANNUAL REPORT 2015 100
Maturity analysis for loans 2015 NOTE 12 – LIQUIDITY RESERVE
Less than 1-3 3 months 1-5 NOK in million 2015 2014 NOK in million 1 month months to 1 year years Total
Cash and cash equivalents Short-term financing - 0 - - 0 Cash and bank deposits 1) 362 233 Long-term financing ------of which restricted funds - - Other interest-bearing loans - - - 300 300 Unrestricted cash 362 233 Total - 0 - 300 300 Short-term overdraft facility 975 860 Draft limitations, financial covenant 2) 236 - Maturity analysis for loans 2014 Liquidity reserve 1,573 1,093 Less than 1-3 3 months 1-5 NOK in million 1 month months to 1 year years Total Loan facilities Unsecured bond loan (see N ot e 11) 300 300 Short-term financing - 0 200 - 200 - of which utilised 300 300 3) Long-term financing - - - 76 76 Short-term overdraft facility (see Group Note 18) 400 860 Other interest-bearing loans - - - 300 300 - of which utilised - - Total - 0 200 376 577 Short-term overdraft facility (see Group Note 18) 375 - - of which utilised - - 3) Includes interest payable. Short-term overdraft facility (see Group Note 18) 200 200 - of which utilised - 200
1) The subsidiaries’ deposits in the parent company’s cash pool of net NOK 2,591 million at 31 December 2015 (NOK 1,415 million at 31 December 2014) are posted as liquid assets in Atea ASA, and as short-term balances with the subsidiaries. See Note 10.
2) Limited by a bond covenant ratio in 2015 and 2014 of 2.5x Atea Group EBITDA (net debt/last twelve months pro forma EBITDA). ATEA ASA ANNUAL REPORT 2015 101
NOTE 13 – CLASSIFICATION OF FINANCIAL INSTRUMENTS
2015 2014 Loans and Amortised Fair Loans and Amortised Fair NOK in million receivable cost value 1) NOK in million receivable cost value 1)
Financial assets Financial assets Interest-bearing long-term receivables 1,836 1,836 Interest-bearing long-term receivables 956 956 Trade receivables 38 38 Trade receivables 24 24 Other receivables 2) 272 272 Other receivables 2) 435 435 Cash and cash equivalents 362 362 Cash and cash equivalents 233 233
Financial liabilities Financial liabilities Interest-bearing long-term liabilities 4) 300 300 Interest-bearing long-term liabilities 4) 300 300 Other long-term liabilities 3) 0 0 Other long-term liabilities 3) 76 76 Trade payables 2 2 Trade payables 1 1 Trade payables in the same group 1 1 Trade payables in the same group 1 1 Interest-bearing current liabilities 0 0 Interest-bearing current liabilities 200 200 Other current liabilities 3) 2,606 2,606 Other current liabilities 3) 1,431 1,431
1) Book value is a reasonable estimate of fair value in cases where these numbers are identical 2) Less prepaid expenses 3) Less provision for restructuring and other provision 4) Interest-bearing long-term liabilities consist of unsecured bond loan, NOK 300 million (see N ot e 11)
NOTE 14 – COMMITMENT
See Note 25 in Atea Group Financial Statements and Notes. ATEA ASA ANNUAL REPORT 2015 102
Page Independent Auditor’s Report to the Annual Shareholders' Meeting of Deloitte AS Atea ASA Dronning Eufemias gate 14 Postboks 221 Sentrum NO-0103 Oslo Norway
Tel: +47 23 27 90 00 Fax: +47 23 27 90 01 www.deloitte.no
To the Annual Shareholders' Meeting of Atea ASA Opinion on the financial statements of the parent company In our opinion, the financial statements of the parent company are prepared in accordance with the law INDEPENDENT AUDITOR’S REPORT and regulations and give a true and fair view of the financial position of Atea ASA as at December 31, , and of its financial performance and its cash flows for the year then ended in accordance with simplified application of international accounting standards according to the Norwegian accounting act REPORT ON THE FINANCIAL STATEMENTS § 3- . We have audited the accompanying financial statements of Atea ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of Opinion on the financial statements of the group the parent company and the financial statements of the group comprise the statement of financial position In our opinion, the financial statements of the Atea group are prepared in accordance with the law and as at December , the income statement and the statement of comprehensive income, the regulations and give a true and fair view of the financial position of the group as at December 31, , statement of changes in equity and the statement of cash flow for the year then ended, and a summary of and of its financial performance and its cash flows for the year then ended in accordance with significant accounting policies and other explanatory information. International Financial Reporting Standards as adopted by EU.
The Board of Directors and the Managing Director’s Responsibility for the Financial Statements REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The Board of Directors and the Managing Director are responsible for the preparation and fair Opinion on the Board of Directors’ report and the statements on Corporate Governance and presentation of the financial statements of the parent company in accordance with simplified application Corporate Social Responsibility of international accounting standards according to the Norwegian accounting act § 3-9, and for the Based on our audit of the financial statements as described above, it is our opinion that the information preparation and fair presentation of the financial statements of the group in accordance with International presented in the Board of Directors report concerning the financial statements and in the statements on Financial Reporting Standards as adopted by EU, and for such internal control as the Board of Directors Corporate Governance and Corporate Social Responsibility, the going concern assumption and the and the Managing Director determine is necessary to enable the preparation of financial statements that proposal for the allocation of the profit is consistent with the financial statements and complies with the are free from material misstatement, whether due to fraud or error. law and regulations.
Auditor’s Responsibility Opinion on Registration and Documentation Our responsibility is to express an opinion on these financial statements based on our audit. We Based on our audit of the financial statements as described above, and control procedures we have conducted our audit in accordance with laws, regulations, and auditing standards and practices generally considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) accepted in Norway, including International Standards on Auditing. Those standards require that we 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and whether the financial statements are free from material misstatement. documentation of the company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. Oslo, March 2016 In making those risk assessments the auditor considers internal control relevant to the entity’s preparation Deloitte AS and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Kjetil Nevstad State Authorised Public Accountant (Norway) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK Limited company, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/no/omoss for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening org.nr: 980 211 282 ATEA ASA ANNUAL REPORT 2015 103
Statement of Corporate Governance
The Board of Directors and management of Atea vis-à vis co-workers, business contacts and of 25.3 percent. Atea's equity was NOK 2,285 4. Equal treatment of shareholders ASA ("Atea" or the "company") aim to execute society at large. The Group provides a policy for million at the same time. The Board of Directors and transactions with related parties their respective tasks in accordance with the corporate ethics to employees to ensure that all continuously assesses the Group’s financial Equal treatment highest standards for corporate governance. persons acting on behalf of the Group perform strength and capital requirements in light of the Atea ASA has only one class of shares. The Atea's standards for corporate governance their activities in an ethically proper manner at Group’s strategy and risk profile. Articles of Association do not contain any voting provide a critical foundation for the company’s any given time. right restrictions. All shares have equal rights. management. These principles must be viewed Dividend in conjunction with the company’s efforts to Corporate Social Responsibility It is Atea's objective to offer competitive returns Decisions to waive the shareholders' constantly promote a sound corporate culture Atea supports the UN Global Compact’s ten to its shareholders through capital appreciation pre-emption rights throughout the organization. The company’s principles of corporate social responsibility and a high dividend payout. The company's policy Any proposal to waive the pre-emption rights of core values of respect, trust, accountability and within the areas of human rights, labour stand- is to distribute over 70 percent of free cash flow existing shareholders to subscribe for shares in equal treatment are central to the Board’s and ards, environment and anti-corruption. Atea has (calculated as cash flow from operations minus the event of share capital increase will be justified. management’s efforts to build confidence in the since 2011 reported on activities related to the capital expenditures) to shareholders in the form If the Board of Directors has been granted a company, both internally and externally. Global Compact with the main focus on principles of a dividend. Any dividends proposed by the power of attorney to increase the company's regarding environment. Activities related to Board to the AGM shall be justified based on share capital and waive the pre-emption rights Atea’s principles for corporate governance are corporate social responsibility are provided in a the company's dividend policy and its capital of existing shareholders, justification of such based on Norwegian law, regulations by the Oslo separate document on the company’s website requirements. resolution will be disclosed in a stock exchange Stock Exchange and the Norwegian Code atea.com. announcement issued in connection with the of Practice for corporate governance (here- The Board of Directors will propose a dividend resolution. after referred to as the “Code”) published by 2. Business operations of NOK 6.50 per share for the 2015 accounting the Norwegian Corporate Governance Board The business objective of Atea as stated in the year. The dividend will be paid out in two instal- Purchase of own shares (www.nues.no) on October 30, 2014. The Articles of Association is as follows: "The objec- ments of NOK 3.25 per share in May 2016 and At the Annual General Meeting held 23 April company’s and its subsidiaries' (the "Group") tive of the company is the sale of IT services, NOK 3.25 per share in October 2016. 2015, the Board of Directors was authorized to policy on corporate governance are published equipment, systems and related products, here- purchase own shares. This authority is given in each year in the annual report, and described under to participate in other companies having Powers of attorney to the Board of Directors accordance with Section 9–4 of the Norwegian in detail below. financial purposes." The Articles of Association Powers of attorney granted by the shareholders Public Limited Companies Act, and it grants the are available on the company’s website. Atea has to the Board of Directors at the General Meeting Board of Directors authority to allow Atea ASA 1. Ethical Guidelines and defined goals and strategies for its business, shall be limited to specific purposes, and each and/or its subsidiaries to buy shares in Atea ASA Corporate Social Responsibility which are described in the annual report. purpose shall be treated as a separate issue in for a maximum par value of NOK 70 million. The Ethical Guidelines the General Meeting. Powers of attorney to the minimum and maximum price that may be paid for The Group’s business operations depend on trust 3. Equity and dividends Board of Directors are only provided with a term each share is NOK 10 (par value) and NOK 200, and a good reputation. It is a requirement that Equity until the next General Meeting. respectively. The Board of Directors is free to all of the Group’s employees safeguard and foster The Group’s equity totalled NOK 3,480 million elect the methods to be used for the acquisition the Group’s reputation by acting responsibly at the end of 2015, representing an equity ratio and sale of own shares. This authority is valid ATEA ASA ANNUAL REPORT 2015 104
until the Annual General Meeting in 2016 and close associates of any such parties, the Board 6. The General Meeting so that the shareholders can make a decision on will expire no later than 30 June 2016. As of 31 of Directors will arrange for an assessment of the The General Meeting guarantees shareholders the matters that are to be resolved. The Notice December 2015, Atea ASA held 576,479 own transaction to be obtained from an independent participation in the company’s highest body. An will provide information on direct and proxy voting shares, which corresponds to 0.5 percent of the third party, however, this will not apply if the Annual General Meeting shall be held within procedures (including information on a person total number of shares issued. transaction requires approval from the General June 30 each year. Notice of the General who will be available to vote on behalf of the Meeting pursuant to the Public Limited Liability Meeting shall be sent to all the shareholders shareholders as their proxy), which enable share- Transactions the company will carry out in its Companies Act. Further, independent valuations with a known address. The summons, supporting holders to vote separately for each individual own shares will be made either through the stock will also be arranged in case of transactions information on the resolutions to be considered agenda item or candidate that shall be elected. exchange or if made otherwise, at a prevailing between companies in the Group where any of the by the General Meeting, hereunder the recom- Shareholders may provide their votes in writing stock exchange price. In case of limited liquidity companies involved have minority shareholders. mendations of the Nominating Committee, will or electronically, although no later than two days in the company's shares, the company will The company has established routines that be published on Atea’s website at least 21 days in advance of the General Meeting. consider other means of such transactions to ensure that members of the Board of Directors prior to the date of the General Meeting. ensure equal treatment of all shareholders. and senior management shall notify the Board At a minimum, the Board Chairman, Chief of Directors if they have any material direct or The right to participate in and vote at the General Executive Officer, Chief Financial Officer, auditor, Authority to issue new shares indirect interest in an agreement that is entered Meeting may only be exercised when ownership of and a member of the Nominating Committee The Board of Directors was authorized by the into by the Group. shares has been recorded in the company’s share- participate at the General Meeting. The General Annual General Meeting held 23 April 2015 holder register (VPS) on the fifth weekday prior Meeting is chaired by an independent chairperson. to increase the company’s share capital by a Insider trading to the General Meeting being held, pursuant to maximum of NOK 30 million through the issuance The Board of Directors has adopted instructions Article 9 of the company’s Articles of Association. In addition to the Annual General Meeting, an of a maximum of 3 million shares, each with a par for the Group’s employees and primary insiders Shareholders that wish to participate in the Extraordinary General Meeting may be called value of NOK 10, by one or more private offerings relating to inside information and trading General Meeting (personally or through proxy) by the Board. Shareholders who represent at to employees of the Group as part of an option/ in financial instruments, including the duty of must, pursuant to Article 10 of the Articles of least five percent of the shares may, pursuant incentive program. This authority is valid until the confidentiality, prohibition of trading, investigation Association, notify the company within a deadline to Section 5–7 of the Norwegian Public Limited Annual General Meeting in 2016 and will expire and reporting requirements, and ban on giving that will be provided in the summons and which Companies Act, demand an Extraordinary no later than 30 June 2016. advice. shall be no less than 5 days prior to the date on General Meeting to address a specific matter. which the General Meeting is held. Registration Transactions with related parties 5. Free negotiability for the General Meeting is made in writing by 7. The Nominating Committee In the event of transactions between the Atea ASA’s shares are freely negotiable. The letter or through the Internet. The Nominating Committee shall, pursuant to company and its related parties that are not Articles of Association do not contain any trading Article 7 of the Articles of Association, consist immaterial, such as transactions with a share- restrictions. The Notice will provide the agenda for the of the Board Chairman and two members elected holder, a shareholder’s parent company, members General meeting, and sufficient information on by the General Meeting. The members who are of the Board of Directors, executive personnel or each item on the agenda for the General Meeting elected by the General Meeting have a term of ATEA ASA ANNUAL REPORT 2015 105
office of two years. The Nominating Committee Atea has made arrangements on its website Election and composition of for a term of two years and may stand for was re-elected by the Annual General Meeting (www.atea.com/IR) whereby shareholders may the Board of Directors re-election. in 2015 and consists of: submit proposals to the Nominating Committee The General Meeting elects the shareholder’s for candidates for election as members of the representatives to the Board of Directors. The Independence of the Board of Directors • Karl Martin Stang Board of Directors. Nominating Committee prepares the nominations The Board of Directors considers itself to be (Chairman of the Nominating Committee) for shareholder-elected Board members prior independent of the Group’s management, and • Carl Espen Wollebekk The Code (article 7) states that; “No more to the election, as stated in Article 7 above. free of any conflict of interest between the share- • Ib Kunøe (Chairman of the Board) than one member of the nomination committee Resolutions concerning the composition of the holders, Board of Directors, corporate should be a member of the board of directors, Board of Directors are made on the basis of a management and the company’s other stake- The Nominating Committee's duties are to and any such member should not offer himself simple majority. The Board of Directors elects holders. The annual report provides information propose candidates for election to the Board of for re-election to the board.” The company the Board Chairman and deputy chairman. on the Board member’s participation in Board Directors and to propose the fees to be paid to deviates from the recommendation as the Board This deviates from the Code, which states that meetings and their competence. the Board members. The Nominating Committee Chairman, pursuant to the Articles of Association, the Board Chairman should be elected by the may also propose new members to the Nomi- is member of the Nominating Committee and General Meeting. The reason for such deviation Members of the Board of Directors are encouraged nating Committee. The Nominating Committee's may be re-elected as member of the Board of is that it has been agreed with employees and to own shares in Atea. proposals shall be justified. Directors. The Board is of the opinion that it is an shareholders that a Corporate Assembly shall advantage to have continuity in the Nominating not be established and then the Board Chairman 9. The Board of Director’s work The General Meeting has adopted guidelines Committee and Board of Directors and therefore shall, pursuant to the Norwegian Public Limited The Board of Director’s duties in general for the composition and work of the Nominating the Board Chairman should be entitled to stand Companies Act § 6-1 (2), be elected by the Board The Board of Directors has primary responsibility Committee. The guidelines state that elected for re-election as a member of both bodies. of Directors. for governance of the Group. The function of members of the Nominating Committee should the Board of Directors is primarily to safeguard a) be independent of the Board of Directors 8. Corporate Assembly and The shareholder-elected Board members are: the interests of the shareholders. However, the and the company’s main shareholders, b) have Board of Directors; composition Ib Kunøe (Board Chairman), Sven Madsen, Board of Directors also bears responsibility for competence and experience with respect to and independence Morten Jurs, Lisbeth Toftkær Kvan and the company’s other stakeholders. the position as Board member, c) have good Corporate Assembly Saloume Djoudat. Ib Kunøe is the main share- knowledge and competence within the area of An agreement has been entered into with the holder and Board Chairman of Consolidated The Board of Directors shall hire the Chief the Group’s business and d) be well oriented employees of the Norwegian part of the Group, Holdings A/S, which owns Systemintegration ApS. Executive Officer, direct the Group's strategy, within the Nordic industry and commerce. The whereby a Corporate Assembly shall not be Systemintegration ApS is the company’s largest and ensure proper control and risk management guidelines further state that the Nominating established, but the employees shall instead shareholder. Sven Madsen is financial director of the company's assets, business operations Committee shall have contact with shareholders, increase their representation in the Board of in Consolidated Holdings A/S. The other Board and financial reporting. Matters of importance Board members and the CEO as part of its work Directors as provided by the Norwegian Public members are independent of the company’s for these objectives shall be reviewed and, if on proposing candidates for election to the Board Limited Companies Act § 6-4 (3). largest shareholders and the company’s necessary, approved by the Board of Directors. of Directors. management. The Board members are elected For example, the Board will formally approve the ATEA ASA ANNUAL REPORT 2015 106
Group's annual and quarterly reports, business Board members receive information on the Nominating Committee also serves as the Group's and to identify potential errors and omissions strategy and M&A plans. Group’s operational and financial performance, Compensation Committee. The Compensation in the financial statements. During the meet- including monthly financial reports. The Board Committee’s responsibility is to prepare to the ings, Management analyzes variances between Rules of procedure members are free to consult the Group’s manage- Board of Director's guidelines for executive each segment's actual performance and fore- The work of the Board of Directors is described ment if they feel a need to do so. compensation and to monitor these compensation cast, as well as its performance in the previous in guidelines which are approved by the Board. guidelines. Details of the company's use of Board year. External market data is also used to The guidelines relate to the Board's responsi- Audit Committee Committees are provided in the annual report. analyze business performance across the group. bilities and authority, the administration of Board The Company has an Audit Committee which When the financial reporting and analysis is meetings, and the Board's confidentiality and became effective in 2010. The Audit Committee The Board of Directors’ self-evaluation complete, Management reports the monthly conflict of interest requirements. If the chairman also serves as the Compliance Committee for the The Board of Directors performs an annual financial statements together with a summary of of the Board is or has been personally involved Group. Members of the Audit Committee are evaluation of how the Board members function business operations to the Board of Directors in matters of a material character, the Board's Sven Madsen, Morten Jurs and Lisbeth Kvan. individually and as a group. and executive team. consideration of such matters are chaired by The responsibilities of the Audit Committee another member of the Board of Directors. are amongst other to: (i) conduct the Board of 10. Risk management and When the Group acquires companies, the Director’s quality assurance of the financial internal control reporting practices of the acquired company are Notice and structure of meetings reporting, (ii) monitor the company’s internal Guidelines for internal control reviewed and integrated with corporate practices The Board of Directors schedules fixed meetings control and risk management systems, (iii) The Group has established guidelines for internal within a month of the acquisition date so that every year. Normally six to eight meetings are have contact with the Group’s auditor regarding control which include routines for financial the Group can consolidate the acquired company held annually. Additional meetings are called as audit of the Group and company accounts, (iv) reporting, communication, authorization, risk within the Group accounts by the next quarterly required. A total of eight meetings were held in review and monitor the auditor’s independence, management, ethics and social responsibility. financial report. 2015. including services other than auditing that has In order to ensure internal control and manage been delivered by the auditor and (v) provide risk, the Group conducts comprehensive financial The Board of Directors performs an annual The Board of Directors’ discussions and minutes its recommendations to the Board of Directors reporting and reconciliation on a monthly basis, review of the company's most important areas of meetings are kept confidential, unless the with respect to election of auditor,(vi) establish on both a consolidated, segment and subsidiary of exposure to risk, including its internal control Board of Directors determines otherwise or and enforce procedures for receipt, storage and level. All financial reporting within the Group is arrangements. if there is clearly no need for such treatment. treatment of complaints regarding accounting, in accordance with IFRS. In addition to the Board members, the Chief internal accounting controls or auditing matters. 11. Remuneration of Executive Officer, Chief Financial Officer and (vii) review and monitor the Group's compliance Immediately after the completion of the monthly the Board of Directors the company secretary will regularly participate function. financial report, the Group's financial admin- The General Meeting determines the annual in the Board meetings. Other participants are istration holds a meeting with the financial remuneration to the Board of Directors. The invited as required. Use of Board Committees management of each of the business segments. remuneration shall reflect the Board of Directors’ The Group has a Nominating Committee pursuant The purpose of the meeting is to follow up on responsibility, expertise, time spent and to the Articles of Association. The the performance of each business segment the complexity of the operation. The ATEA ASA ANNUAL REPORT 2015 107
remuneration is not dependent on results. The The Board of Directors has established Directors’ report are published on the company’s this respect. Although guidelines have not been annual remuneration is currently NOK 300,000 guidelines for remuneration of the company’s website at least twenty-one days prior to the issued, Atea has a long-lasting practice for for the Board Chairman, NOK 150,000 for each executives, which are submitted in a separate General Meeting. contact with shareholders and the Group is of shareholder-elected Board member, and NOK statement to the General Meeting. The guidelines the opinion that such practice satisfactorily safe- 100,000 for each employee-elected Board set out the main principles applied in determining Other market information guards the considerations on which the Code’s member. No stock options have been granted to the salary and other remuneration to executives, Open investor presentations are arranged in recommendation is based. the Board members. are linked to value creation for shareholders connection with the publication of the Group’s and the company's earnings performance over annual and quarterly results. The Chief Executive 14. Takeovers Members of the Board of Directors and/or time and incentivises performance based on Officer and Chief Financial Officer present the The Board of Directors has not established any companies with which they are associated, quantifiable factors of which the executives financial results of the group and each business main principles for how the Board of Directors do in general not take on assignments for the can influence. Atea complies with the Code's segment, and present additional information should act in the event of a takeover bid, as company. If, however, such assignments are requirement that it shall be clear which aspects which is relevant to the company's future recommended by the Code's Article 14. However, made, the matters are disclosed to the Board of of the guidelines are advisory and which, if any, prospects. Investor-related information and the Board of Directors has discussed the issue Directors and the Board of Directors approves are binding. Furthermore, Atea complies with the presentations associated with the annual and and have a clear opinion of how to act and thus their remuneration. Code’s requirement that the General Meeting quarterly results are available on the Group’s the Board of Directors has not considered it shall vote separately on each of these aspects. website (www.atea.com/IR). Beyond this, the necessary to issue written guidelines. In the If remuneration is provided to Board members in Group conducts regular meetings with analysts event of a takeover offer, the Board of Directors addition to the regular Board remuneration, this Performance related remuneration in the form and investors. will seek expert advice in order to comply with will be reported separately in the annual report. of share options, bonus programmes or similar, applicable rules and regulations and will other- For a detailed account of the remuneration paid to executive personnel is subject to an absolute The Group prioritizes the open and fair wise act in a manner to ensure equal treatment to Board members and their shareholdings in the limit. distribution of information to the financial of shareholders, seek to avoid that the company's company, see Notes 7 and 16, respectively, to the markets. Importance is attached to making the business activities are unnecessary disrupted annual accounts. 13. Information and communication same information available to the market and and to ensure that the shareholders are given Annual and interim reporting other stakeholders at the same time. Caution sufficient information and time to consider the 12. Remuneration of The Group’s financial calendar and presentations with regard to distribution of information shall offer. The company’s Articles of Association do executive personnel are published on the company’s website (www. therefore be exercised when talking to analysts not contain any defence mechanisms against the The CEO’s remuneration is set by the Board of atea.com/fc). The Group presents its interim and investors. Guidelines with respect to the acquisition of shares, nor has any measures been Directors, based on recommendation from the accounts on a quarterly basis and its annual company’s contact with shareholders outside taken to restrict the opportunity to acquire shares Compensation Committee. The remuneration of accounts during the month of February. The of General Meetings have not been issued. The in the company. the CEO is specified in Note 6 to the annual complete financial statements and Board of company therefore deviates from the Code in accounts. ATEA ASA ANNUAL REPORT 2015 108
15. The Auditor the Audit Committee during the audit process so by the Code's Article 15. The Board of Directors firm has provided consulting services related to The Auditor’s relationship with that the Audit Committee can fulfil its oversight is of the opinion that sufficient communication accounting, tax and reporting. Reference is made the Board of Directors responsibilities. At least once a year the auditor exists between the Board and the executive to Note 7 to the annual accounts. The corporate The auditor participates at the Board meeting presents to the Audit Committee a review of the management to manage instances in which management holds regular meetings with the where the annual accounts are discussed. At this company's internal control procedures, including the auditor's services are required without auditor. In these meetings the auditor reports on meeting, the Board of Directors is briefed on the identified weaknesses, if any, and proposals for compromising the auditor's independence. the company’s accounting practices, risk areas annual accounts and any matters of particular improvement. Furthermore, the independence of the auditor is and internal control routines. The auditor’s remu- concern to the auditor, including matters continuously monitored by the Audit Committee. neration is approved by the company’s General where there has been disagreement between The Board of Directors and the auditor meet at Meeting, including a breakdown of remuneration the auditor and the executive management of least once per year without management present. Auditor’s relationship to the between auditing and other services. the company. The auditor provides the Audit The Board of Directors has not issued guidelines corporate management Committee with an annual plan for the audit of with respect to the Group’s use of the auditor for Deloitte has been the company’s auditor since the company and he has regular contact with services other than the audit, as recommended 2006. In addition to ordinary auditing, the auditing Holding Norway Sweden Denmark Atea ASA Atea AS Atea AB Atea A/S Atea ASA Brynsalleen 2 Kronborgsgränd 1 Lautrupvang 6 Brynsalleen 2 Box 6472 Etterstad Box 18 DK-2750 Ballerup Box 6472 Etterstad NO-0605 Oslo SE-164 93 Kista Tel:+45 70 25 25 50 NO-0605 Oslo Tel: +47 22 09 50 00 Tel: +46 (0)8 477 47 00 O rg . n o 25 5114 8 4 Tel: +47 22 09 50 00 Org.no 976 239 997 Org.no 556448-0282 [email protected] Org.no 920 237 126 [email protected] [email protected] atea.dk [email protected] atea.no atea.se atea.com
Finland Lithuania Group Logistics Group Shared Services Atea Oy Atea Baltic UAB Atea Logistics AB Atea Global Services SIA Jaakonkatu 2 J. Rutkausko st. 6 Smedjegatan 12 Mukusalas Street 15 PL 39 LT-05132 Vilnius Box 159 LV-1004 Riga FI-01621 Vantaa Tel: +370 5 239 7899 SE-351 04 Växjö Tel: +371 67359600 Tel: + 358 (0)10 613 611 Org.no 122 588 443 Tel: +46 (0)470 77 16 00 Org.no 40003843899 Org.no 091 9156-0 [email protected] Org.no 556354-4690 [email protected] [email protected] atea.lt [email protected] ateaglobal.com atea.fi atealogistics.com